May 9th, 2014 / Insight posted in MKS Comments

HMRC consults on ‘Direct Recovery of Debts’: comment from Paul Spindler

Tax partner Paul Spindler comments: “I welcome the Treasury Select Committee’s call on the government to justify the retrospective nature of upfront payment of taxes in tax avoidance cases. 

“This draconian measure, affecting 65,000 taxpayers, relies on HMRC to exercise ‘judgment’, as it currently does on failure to pay cases. We all know that that ‘judgment’ is often flawed; HMRC have seriously miscalculated the impact of several high profile initiatives to collect tax. The UK/Swiss amnesty collected a fraction of the headline justification for the introduction of such a scheme and information sharing between different jurisdictions has not produced the flow of information envisaged.

“This initiative may only be successful in a minority of cases and could, in the meantime, force many taxpayers into serious financial hardship or even personal bankruptcy – which would, in turn, result in significant costs to the state.

“Whilst it may be a policy objective of the government to tackle tax avoidance, it would be very wrong for individuals to be penalised for the failures and shortfalls of unclear tax legislation.

“My hope is that the government would take heed of the Committee’s comments before individuals’ livelihoods are affected.”