Hi all,
Sending a letter to my MP, Jeremy Corbyn in response to a letter received via him from Stephen Timms.
You may notice parts of my letter have been copied from your good selves
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Dear Mr Corbyn
Thank you for writing to Stephen Timms on my behalf and forwarding his reply with regards to section 58 of the 2008 Finance Act. However, I must take issue with a few things he has said.
Mr Timms has stated that retrospective taxation does not in itself contravene the European Convention of Human Rights. He also goes on to say “In exceptional circumstances, the government reserves the right to use retrospection to ensure fairness and certainty for all taxpayers”.
Generally, Mr Timms would be right that retrospective taxation does not contravene European human rights when there is a good reason for introducing it. However in this case, the courts may not share his view, particularly when all the facts come to light.
The reason being, that the govt. and HMRC were aware of the tax avoidance scheme since 2001. Instead of trying to legislate against it at that time, they chose to sit on their hands for 7 years!
Where the Government are known to be aware of a practice and do not move to close it down, is it not the case that taxpayers have a reasonable expectation that the Government have chosen to tolerate that course of action, and plan accordingly? I am really keen to hear a straight and direct answer from Stephen Timms on this question.
Also, I would like to hear from Mr Timms as to why in light of the above, this measure provides “fairness and certainty”. If anything, it provides uncertainty as HMRC did not communicate their position to my tax advisors (Montpelier) until February 2008, despite the scheme being disclosed to HMRC every year. This measure can hardly been seen as fair.
I would also like to draw your attention to a statement by Lord Tomlin in Duke of Westminster (1936) 19 TC 490 – “every man is entitled, if he can, to order his affairs so that the tax attaching under the appropriate Acts is less than it otherwise would be.” How can a taxpayer order his affairs if the goalposts are moved retrospectively. Is this what is meant by the government’s favourite word “fairness”? I do hope you can ask this question to Mr Timms.
During the introduction of the finance bill, there were some damming comments made in parliament against the bill that were later dismissed by Jane Kennedy. I refer you to this excerpt from Hansard:
In addition, there were statements from the professional bodies who were all very critical of the way the govt. has handled this matter. The Chartered Institute of Taxation described the retrospective nature as “extreme” and “unjustified”, the Law Society described it as “wrong in principle”, and the Institute of Chartered Accountants in England and Wales said that “it sends out a very damaging signal about the stability of the UK tax system”.
Finally, I do hope that you can put all of my questions to Mr Timms, as I feel that my family and I (and thousands like me) are victims of unfair legislation enacted by this government.
Many thanks for your help and I wish you and your family all the best for the holiday season.
Yours sincerely
Sending a letter to my MP, Jeremy Corbyn in response to a letter received via him from Stephen Timms.
You may notice parts of my letter have been copied from your good selves
----------------------------------------------------------------------
Dear Mr Corbyn
Thank you for writing to Stephen Timms on my behalf and forwarding his reply with regards to section 58 of the 2008 Finance Act. However, I must take issue with a few things he has said.
Mr Timms has stated that retrospective taxation does not in itself contravene the European Convention of Human Rights. He also goes on to say “In exceptional circumstances, the government reserves the right to use retrospection to ensure fairness and certainty for all taxpayers”.
Generally, Mr Timms would be right that retrospective taxation does not contravene European human rights when there is a good reason for introducing it. However in this case, the courts may not share his view, particularly when all the facts come to light.
The reason being, that the govt. and HMRC were aware of the tax avoidance scheme since 2001. Instead of trying to legislate against it at that time, they chose to sit on their hands for 7 years!
Where the Government are known to be aware of a practice and do not move to close it down, is it not the case that taxpayers have a reasonable expectation that the Government have chosen to tolerate that course of action, and plan accordingly? I am really keen to hear a straight and direct answer from Stephen Timms on this question.
Also, I would like to hear from Mr Timms as to why in light of the above, this measure provides “fairness and certainty”. If anything, it provides uncertainty as HMRC did not communicate their position to my tax advisors (Montpelier) until February 2008, despite the scheme being disclosed to HMRC every year. This measure can hardly been seen as fair.
I would also like to draw your attention to a statement by Lord Tomlin in Duke of Westminster (1936) 19 TC 490 – “every man is entitled, if he can, to order his affairs so that the tax attaching under the appropriate Acts is less than it otherwise would be.” How can a taxpayer order his affairs if the goalposts are moved retrospectively. Is this what is meant by the government’s favourite word “fairness”? I do hope you can ask this question to Mr Timms.
During the introduction of the finance bill, there were some damming comments made in parliament against the bill that were later dismissed by Jane Kennedy. I refer you to this excerpt from Hansard:
http://www.parliament.the-stationery...m/80522s04.htm
Mr. Gauke: My hon. Friend makes an important point. It comes back to legitimate expectation. If the Government do not act on something, perhaps they have taken the view that they will not pursue it. That argument has become stronger in recent years, as the Government now benefit from a disclosure regime. Schemes that result in people making tax savings are disclosed to HMRC, which has the opportunity to review the situation and introduce legislation. We have seen some examples of that in this and previous Bills.
It might be worth returning to the Rees rules, which we discussed on Tuesday. My hon. Friend the Member for Fareham discussed them with the Economic Secretary,
Column number: 369and there was some disagreement over interpretation. However one looks as those rules, this provision does not comply with them. The rules set out three circumstances that apply with retrospective tax legislation. If anti-avoidance provisions are to be legislated, there should be a clear warning in the House of Commons, where feasible a draft law should be published as soon as possible—to give effect to the proposal—and the clause should be incorporated in the next available Finance Bill. I would be grateful if the Financial Secretary could enlighten us on the extent to which that process has been followed with these provisions. I am not sure that it has. The hon. Member for South-East Cornwall referred to the Padmore case and the previous Paymaster General’s warning about employment-related schemes going back to December 2004. When was the warning given and did legislation follow as soon as possible? The Government are not on particularly strong ground.
Mr. Gauke: My hon. Friend makes an important point. It comes back to legitimate expectation. If the Government do not act on something, perhaps they have taken the view that they will not pursue it. That argument has become stronger in recent years, as the Government now benefit from a disclosure regime. Schemes that result in people making tax savings are disclosed to HMRC, which has the opportunity to review the situation and introduce legislation. We have seen some examples of that in this and previous Bills.
It might be worth returning to the Rees rules, which we discussed on Tuesday. My hon. Friend the Member for Fareham discussed them with the Economic Secretary,
Column number: 369and there was some disagreement over interpretation. However one looks as those rules, this provision does not comply with them. The rules set out three circumstances that apply with retrospective tax legislation. If anti-avoidance provisions are to be legislated, there should be a clear warning in the House of Commons, where feasible a draft law should be published as soon as possible—to give effect to the proposal—and the clause should be incorporated in the next available Finance Bill. I would be grateful if the Financial Secretary could enlighten us on the extent to which that process has been followed with these provisions. I am not sure that it has. The hon. Member for South-East Cornwall referred to the Padmore case and the previous Paymaster General’s warning about employment-related schemes going back to December 2004. When was the warning given and did legislation follow as soon as possible? The Government are not on particularly strong ground.
In addition, there were statements from the professional bodies who were all very critical of the way the govt. has handled this matter. The Chartered Institute of Taxation described the retrospective nature as “extreme” and “unjustified”, the Law Society described it as “wrong in principle”, and the Institute of Chartered Accountants in England and Wales said that “it sends out a very damaging signal about the stability of the UK tax system”.
Finally, I do hope that you can put all of my questions to Mr Timms, as I feel that my family and I (and thousands like me) are victims of unfair legislation enacted by this government.
Many thanks for your help and I wish you and your family all the best for the holiday season.
Yours sincerely
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