The ability of taxpayers in dispute with HMRC about how much tax is owed, to turn to the court system for a ruling, is under threat, the President of the Chartered Institute of Taxation has warned.
In a speech at the CIOT’s annual President’s Reception, Anne Fairpo said that the balance of power is in danger of tilting too far towards the state at the expense of taxpayer rights and that, if the court system is not working adequately, it should be reformed to work better for all who need to use it, rather than simply allowing the tax authorities to sidestep it.
“I am concerned about the increasing focus on HMRC enforcement without third party supervision. There is, and can be, no dispute that HMRC needs to enforce tax debts. There’s no dispute that we have a societal infrastructure that needs to be paid for.
In a perfect world, perhaps HMRC wouldn’t need the courts - but then again, in a perfect world, no-one would need the courts. This is not a perfect world. People make mistakes. HMRC makes mistakes.
In this imperfect world:
direct recovery of debt
strict liability for innocent failure to declare overseas income and gains
follower notices, with a 50% penalty if you persist with your right to have your case heard in the courts and lose, with an accelerated payment notice also served on you
all undermine the ability of a taxpayer with a genuine dispute to stand up to HMRC.
"We’re finding it too difficult to collect via the court system" isn’t a good enough reason to throw out the protection of the courts for taxpayers. The state inevitably has the balance of power and resources, even if it doesn’t feel like it from an individual civil servant’s end of things!
There are undoubtedly problems with enforcing debts - but that’s true for all, not just government. Sidestepping the courts to benefit the state alone is missing the opportunity to reform the court system to enable business to work better in general.”