CIOT’s president Anne Fairpo has warned that recent changes in HMRC’s enforcement powers mean the role of the courts in settling tax disputes is under threat, as taxpayers face potentially punitive actions and charges which the tax authorities can exercise without going through court procedures
Speaking at CIOT’s annual president’s reception, Fairpo said the balance of power was in danger of tilting too far towards the state at the expense of taxpayer rights, and argued that if the court system was found not to work adequately in cases involving disputed tax or tax debt, it should be reformed.
‘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. 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,’ Fairpo said.
Fairpo cited a number of recent developments as examples of how the taxpayer with a genuine dispute could find it harder to take action against HMRC.
These include HMRC’s proposed new powers for direct recovery of debt; the strict liability charges facing taxpayers who fail to declare overseas income and gains, even if they have done so by mistake; and follower notices with a 50% penalty for anyone who persists in taking a case to court and then loses, plus the risk of being serviced with an accelerated payment notice.
‘There’s 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,’ Fairpo said.