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Government urged to reconsider ‘absurd’ proposals

Proposed legislation on deliberate wrong doing by tax agents has been condemned by the Chartered Institute of Taxation (CIOT) who labelled it ‘absurd’. The Government’s proposals must be ‘completely re-written’, the body said.

Speaking to Payroll World, the organisation’s tax policy director John Whiting said the level of action did not fit the level legislation and that it had exaggerated its reaction: ‘We are simply not convinced this is enough of a problem to warrant this amount of legislation’.

The CIOTs concerns are in response to the Government’s consultation on draft legislation, which if successful, would lead to ‘absurd outcomes’.

The CIOT said that some innocent advisers, journalists and HMRC staff could be held guilty of ‘deliberate wrongdoing’ and potentially subject to a £5,000 fine.

As it stands, the draft legislation applies not just to illegal actions but to any advice that could lead to a tax loss to the Treasury – such as suggesting someone take out an ISA. Other scenarios which could result in the £5,000 fine, the CIOT claims, include: a charity asking a donor to sign a gift aid form, an HMRC official helping with a tax reclaim form or a volunteer encouraging an elderly taxpayer to claim the higher personal allowance.

While the organisation agrees that HMRC must have powers to take action against the minority of those who are involved in deliberate wrong-doing, it had to be thought out properly. Mr Whiting said proposals: ‘have to be framed and phrased properly…it is also crucial the word “dishonest” is included.’

In an earlier statement Mr Whiting stressed: ‘We cannot emphasise enough how strongly we feel that this legislation needs to be re-thought and re-written. The Government needs to start again with these proposals.’

19/04/10