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.”

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