PBR 09: HMRC retains power to drop tax cases

The government has announced that it will be legislating at the earliest opportunity to retain HMRC’s right to drop tax cases where it would be ‘unconscionable’ to do so.

The taxman has long help the power not to pursue tax cases where, even though an amount is technically due, the true amount of tax payable is less. However, a ruling last year said this “equitable liability” practice should be abolished as HMRC had no power to alter tax demands without legislative power.

A strong campaign has now seen the government act in the PBR to retain this power for HMRC.

Andrew Hubbard, president of the Chartered Institute of Taxation, sad: “The most vulnerable in society need protection when things have gone badly wrong, even when they themselves may have caused the problems by their own action – or more often inaction – and the equitable liability practice was an important safety valve of last resort. So I am delighted that a decision has been taken to introduce legislation to put this on a proper, permanent footing.