The independent London newspaper

Tax bill like being hit with 15 years of parking tickets

07 June, 2019

• JENNIFER Graham is not alone, as many thousands of other contractors are facing huge tax bills because of new legislation that permits HMRC to collect tax it had failed to collect in the past and for which the relevant time limits had passed, (‘I was hit by terrifying £48k tax bill,’ May 31).

The legislation is so controversial that nearly 200 MPs (including many who had originally signed up for it) and many members of the House of Lords (including retired judges) have called for its repeal. At a time when Parliament is so divided, the objection to the loan charge is cross-party and even manages to unite remainers and leavers.

Emily Thornberry’s dismissal of her constituent’s concerns is not only at odds with many of her parliamentary colleagues, but (somewhat surprisingly for a qualified barrister) also takes no regard of the human rights breaches caused by the new law.

The loan charge cuts across the rights of taxpayers to certainty in relation to their tax affairs and by-passes the statutory time limits which provide some sense of balance in the tax system.

Even if (with the benefit of hindsight) individuals like Jennifer have been found to have paid less tax on their earnings than they should have done (and that is far from clear), these time limits represent an important safeguard which should not be whittled down at whim.

What makes matters worse is that HMRC was aware of these arrangements back in 2004 and had formed views as to their efficacy, but failed to communicate these effectively to the outside world, thereby giving taxpayers a false sense of security that they were in fact fully effective.

The HMRC action, which Ms Thornberry is so keen to condone, is regrettably about 15 years too late. Having worked on this matter over the past nine months and having given evidence to three parliamentary committees on the topic, I think that the best way of describing the new tax is by way of analogy.

Suppose there is a stretch of road where parking is restricted, but where the yellow line has faded or been dug up. A motorist is unsure whether or not to park there, but sees that other cars seem not to attract any tickets.

The motorist therefore parks there one day, thinking that if s/he gets a ticket, s/he will not return on another occasion. However, the day passes and no ticket is given. So the motorist returns, the next day. And still no ticket. So the motorist continues to park there. This continues for many years.

It is now far too late for the local authority to issue any parking tickets. However, there would be an outcry if a new law were passed to say that the motorists should now pay a charge equivalent to the value of all the tickets they ought to have accumulated over the previous years. The loan charge is equivalent to such a new law.

Temple Tax Chambers, EC4


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