The government has decided to drop the controversial instances of the term 'HMRC thinks' from the finance bill.

The wording, which was used often in the bill in relation to tax penalties, was strongly criticised by the tax profession for opening up the possibility that HMRC would not have to base a decision on fact.

The Chartered Institute of Taxation welcomed the move, stating that the decision will make the legislation work better.

CIoT president Rob Ellerby said: 'Where penalties are concerned, the test should always be objective rather than subjective. We believe that in the proposed legislation the words ‘HMRC think that’ are superfluous. The words come from legislation where the inspector is exercising judgment. In the case of penalties, that is not the position. Either there has been an offence giving rise to a penalty or there has not.'

Further reading:

Advisers cry foul over 'HMRC thinks' penalties

View the 'HMRC thinks' finance bill amendments