TaxAdministrationHuman Rights Act marshalled to fight tax penalties

Human Rights Act marshalled to fight tax penalties

Tax advisers are planning to use the Human Rights Act to protect their clients from tax penalties

Reports this week indicated that chancellor Gordon Brown was certain to
toughen the government’s stance on the late filing of self-assessment returns
and penalties. It is expected that HMRC will hike the penalty for late returns
from £100 to £250 and issue harsher penalties on those who unwittingly pay too
little tax when the pre-Budget report is delivered this Autumn.

Advisers, however, are already responding to what they see as a harsher
penalty regime by using unconventional defences.

Mike Warburton, tax partner at
Grant Thornton,
said he was set to use the Human Rights Act to contest a penalty charged to one
of his clients.

Warburton said that after a ruling in the King vs Waldon case in
2001, a tax penalty under European law was found to be a criminal rather than a
civil case.

The upshot is that any taxpayers who are issued penalties are entitled to the
same protections and protocols as a person facing a criminal charge, as per the
Human Rights
Act.

This means that when charging a penalty,
HMRC is obliged to
follow specific procedures and inform tax payers that they should be careful not
to incriminate themselves. This would provide taxpayers with more opportunities
to challenge penalties.

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