CIoT greatly concerned by retrospective tax action
Applying tax changes backwards goes against a key plank of UK tax governance warns CIoT
Concerns have been raised over the
Treasury’s
use of retrospective action on tax, a situation which puts the principle of
certainty in the tax system into doubt.
The
CIoT has
warned that amendments to tax rules relating to manufactured dividends, which
have been retrospectively applied back to 2007, damages the “key principle of
certainty in the UK tax system”.
“We can understand that at times the government wants to take action to
‘confirm the general understanding of the tax system’ in the light of questions
raised. However, this needs to be used with great caution: it must not dislodge
the principle that the taxpayer is taxed on the wording of the legislation in
place at the time of their actions,” John Whiting, tax policy director at the
CIOT.
“We need a clear statement as to when retrospection will be used and its
boundaries – and Parliament needs to consider such boundaries with care.”
Further reading:
HMRC
slams another loophole shut