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Tax inspectors given draconian new powers to pursue taxpayers

Published on Oct 22, 2009 |

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The PCG has taken exception to a Daily Telegraph article which describes how tax inspectors may pursue people before they break the law.

The Daily Telegraph article suggests that, under draconian new powers, innocent taxpayers may be pursued in case they are in breach of future legislation with has yet to be drawn up by Parliament.

The article, published on 20th October, states that a new code of practice for tax inspectors, issued last month, contains a key passage on defining tax avoidance:

"Avoidance is not defined in the Taxation Acts...One definition is 'a situation where less tax is paid than Parliament intended, or more tax would have been paid, if Parliament turned its mind to the specific issue in question'. At a practical level the problem is then essentially one of deciding what Parliament would have intended and identifying who should be asked to decide this".

Accountants and legal experts interviewed by the Telegraph described the new rules as a "whole warranted extension" of HMRC's powers, which "threatened to undermine the democratic right of Parliament to set the law".

Chris Bryce, the PCG's chairman, describing the new rules as "Orwellian", said that HMRC must act within the law of the land, and that the PCG's legal advice is that if HMRC did ever try to take anything to court on these grounds, it would be thrown out. The Group is therefore seeking clarification on the report with the Government.