Mixed reaction to Han & Yau result

PricewaterhouseCoopers, which represented Han & Yau, said the ruling ‘brought justice to tax allegations’.

Indirect tax partner at PwC, Michael Bailey, said: ‘The outcome of this case will lead to a fundamental change in English law.

‘The hallmark of a civilised society is that it provides access to justice for all, and ensures that the due process is fair,’ he said.

Last December, the VAT & Duties Tribunal ruled in the Han & Yau case that tax evasion offences should be considered criminal for human rights purposes because of the severity of the penalties imposed.

Customs appealed against the decision, but has had its case thrown out by the Court of Appeal.

But head of tax investigations at KPMG, Tom Murray, said the verdict would only leave the tax penalties system in confusion.

‘The court did little more than affirm the principle that substantial tax penalties can amount to “criminal charges” under the Human Rights Act,’ he said.

And, according to the firm, the principles are equally applicable to penalties imposed by the Inland Revenue.

‘The Inland Revenue and Customs, as well as taxpayers and advisers, should regard this as a most unsatisfactory state of affairs. Penalties are an increasing feature of tax compliance and investigation work, and there is an urgent need to go beyond the principle and establish some consensus on the many practical issues that could follow from it,’ said Murray.

PKFs John Gwyer called on Customs and the Inland Revenue to get together with the tax profession to find an alternative way forward.

‘If this decision means the civil approach is not going to be viable in the future because the authorities have to go the criminal route, then that’s a retrograde step,’ he said.

Customs has now been given leave to appeal to the House of Lords.


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Human rights force VAT probe rethink

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