Finance Bill

Written evidence submitted by Mr Raoul Strachan (FB 02)

Subject: Accelerated Payment Notices

I am writing to express my deep concern at the measures contained in this year’s Finance Bill which, if enacted, will give draconian powers to HMRC and cause serious hardship for many innocent people, while undermining the fundamental principle that individuals should be considered innocent until proven guilty.

As you will know, Clause 192 onwards of the Finance Bill outlines proposals that will give HMRC the power to issue ‘Accelerated Payment Notices' in cases where a DOTAS registered tax arrangement is under enquiry or appeal, as well as the ability to issue ‘Follower Notices’, which will allow them to rule that a taxpayer’s financial arrangements are "the same or similar" to those which have been defeated in the tax courts.

These changes will essentially allow HMRC to demand immediate and upfront payment of any arbitrary amount of disputed tax, with no right of appeal. This power will apply retrospectively to anyone whose tax arrangements are under inquiry or appeal going as far back as 2004. This is despite reassurances from the Government that further retrospective legislation will only be used in "wholly exceptional" circumstances.

                             

I believe that these proposals undermine the fundamental principle that everyone has the right to be presumed to be complying with the law unless proven otherwise. Demanding immediate and upfront payment of an arbitrary amount of tax, with no right of appeal and without being able to have your case head before the courts, gives excessive power to HMRC to interpret legislation and case law to its advantage and is a draconian extension of state power against the individual.

I also believe that the retrospective nature of these proposals is deeply offensive. Those who are currently subject to inquiries from HMRC will have been given an expectation as to how their cases would be dealt with. Retrospectively changing the rules half-way through the process goes against natural justice and removes the right of people to have their actions judged under the law as it stood at the time.

The Exchequer Secretary has claimed that these measures are not retrospective. However, this statement is false. The changes will apply to any legitimate and registered tax planning arrangement entered into as far back as 2004, and retrospectively change the way that tax disputes are dealt with. There is the real danger that if the Exchequer Secretary is allowed to defend this legislation by saying that the changes are not retrospective, MPs may be misled into passing an extremely draconian and unjust retrospective change to the law which will have serious financial repercussions for tens of thousands of businesses and individuals. Indeed, you will be aware that the Treasury Select Committee has strongly criticised this aspect of the legislation and said that the Government has not made a case as to why these measures should apply retrospectively.

It is surely perfectly reasonable that any new tax legislation should only apply going forward, and should not be applied retrospectively to those cases which are already in the system.

June 2014

Prepared 10th June 2014