CIoT lobby win for HMRC 'equitable liability' extension

A measure which stops HMRC pursuing tax cases where it is thought excessive and unfair to do so has been retained after pressure from tax experts.

The "equitable liability" practice applies in cases where, although money is technically due, a taxpayer has missed the deadline for appealing against an HMRC estimate of their tax liability.

On the grounds of a misunderstanding about procedures, the taxpayer is allowed to argue that the true amount of tax which should be payable is less.

HM Revenue and Customs has traditionally held the option, but a review in 2008 put the measure under threat of being abolished from April 2010.

But following strong representations from the CIoT, led by the Institute’s President, Andrew Hubbard, and others, the government have told the CIoT they will be legislating "at the earliest opportunity" to retain the practice.

"The Chartered Institute of Taxation has expressed delight at the news that its campaign to retain the 'equitable liability' practice has been successful," the body said.

"Often it is the most vulnerable taxpayers who have benefited from HMRC’s exercise of discretion in these cases."

Andrew Hubbard said: "This is very good news indeed. 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 to have received confirmation directly from the Minister that a decision has been taken to introduce legislation to put this on a proper, permanent footing."