Pre-Budget Report 2009 - Equitable liability saved - announcement in Pre-Budget Report?
Earlier this year HM Revenue & Customs (HMRC) announced that from April 2010 it would not be possible to claim the concessionary relief under the concept of 'Equitable Liability'. Essentially this was a way that HMRC was able to take a common sense and equitable view regarding the collection of a tax charge which although technically correct was clearly inequitable with the circumstances of the case.
For example, a taxpayer may have ignored their tax position for years prompting estimated assessments by HMRC which became final and conclusive and valid for collection. When the taxpayer eventually addressed the problem the calculation of the tax due showed a much reduced position. In cases such as this HMRC was able to dispense with collection of the incorrect tax. Many in the tax profession objected to this and a campaign was spearheaded by the Chartered Institute of Taxation.
The CIOT has now heard from HMRC that they will be legislating 'at the earliest opportunity' to retain the practice. Perhaps there will be a formal announcement in the Pre-Budget Report on 9 December.
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Barry Hallam is a senior manager at Mercer & Hole. If you would like to discuss the contents of this post with Barry you can call him on 020 7353 1597.
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