Before I go out tonight I thought I'd post this from last week's Sunday Times.
A GROUP of Britain’s leading tax advisers is planning to lobby the Treasury in a campaign to curb the powers of the Revenue & Customs and protect small businesses from stealth taxes.
The consultants, together with the Chartered Institute of Taxation, say action is needed after a Court of Appeal decision last week to reject Revenue efforts to force husband-and-wife companies to pay thousands of pounds more in tax.
Last week, in a powerful note to institute members, Mike Warburton, senior tax consultant at Grant Thornton, accused the Revenue of "using its power and resources to bully a number of taxpayers into accepting their view of the legislation — not because they agreed, but because they could not afford to fight back. By picking on a soft target they nearly got away with it”.
He fears that “the Treasury may try this on again with the next soft target they can think of”. He said it was the duty of the professionals to point out that small taxpayers need to be protected from such tactics.
His demands include a guarantee from the Treasury that the Revenue must announce all tax changes in the Commons. He has the support of several tax consultants, including John Whiting of Price Waterhouse Coopers, who helped lead the charge against the Revenue’s attack on family firms.
The row centres on a series of cases, exposed by The Sunday Times in April 2003, in which husband-and-wife limited companies were hit with surprise demands for back-tax on their business dividends.
Geoff and Diana Jones got a bill for £42,000 on their IT business, Arctic Systems, as a result.
Experts said that the Revenue was illegally using an obscure tax rule from the 1930s to increase tax collection by as much as £1.2 billion. But the Revenue said that its position had never changed.
It had the tax experts baffled. They had never before seen the legislation used to attack small family firms. Accountants also panicked. For years they had recommended that husband-and-wife companies be structured this way. If the Revenue’s view had been upheld, they would have faced legal threats from firms and months of restructuring family businesses at vast expense.
The case, in which the couple were supported throughout by the Professional Contractors Group, the trade association that started life four years ago as a lobby group to fight the controversial IR35 tax, soared from local level to the Court of Appeal before the Revenue’s claims were thrown out.
The Revenue even resisted an unprecedented delegation of tax experts that last year went to its Somerset House headquarters to try to change its mind.
Led by Whiting and Anne Redstone of Ernst & Young, the delegates came from leading organisations such as the Chartered Institute of Taxation, the Institute of Chartered Accountants and the Federation of Small Businesses.
The consultants, together with the Chartered Institute of Taxation, say action is needed after a Court of Appeal decision last week to reject Revenue efforts to force husband-and-wife companies to pay thousands of pounds more in tax.
Last week, in a powerful note to institute members, Mike Warburton, senior tax consultant at Grant Thornton, accused the Revenue of "using its power and resources to bully a number of taxpayers into accepting their view of the legislation — not because they agreed, but because they could not afford to fight back. By picking on a soft target they nearly got away with it”.
He fears that “the Treasury may try this on again with the next soft target they can think of”. He said it was the duty of the professionals to point out that small taxpayers need to be protected from such tactics.
His demands include a guarantee from the Treasury that the Revenue must announce all tax changes in the Commons. He has the support of several tax consultants, including John Whiting of Price Waterhouse Coopers, who helped lead the charge against the Revenue’s attack on family firms.
The row centres on a series of cases, exposed by The Sunday Times in April 2003, in which husband-and-wife limited companies were hit with surprise demands for back-tax on their business dividends.
Geoff and Diana Jones got a bill for £42,000 on their IT business, Arctic Systems, as a result.
Experts said that the Revenue was illegally using an obscure tax rule from the 1930s to increase tax collection by as much as £1.2 billion. But the Revenue said that its position had never changed.
It had the tax experts baffled. They had never before seen the legislation used to attack small family firms. Accountants also panicked. For years they had recommended that husband-and-wife companies be structured this way. If the Revenue’s view had been upheld, they would have faced legal threats from firms and months of restructuring family businesses at vast expense.
The case, in which the couple were supported throughout by the Professional Contractors Group, the trade association that started life four years ago as a lobby group to fight the controversial IR35 tax, soared from local level to the Court of Appeal before the Revenue’s claims were thrown out.
The Revenue even resisted an unprecedented delegation of tax experts that last year went to its Somerset House headquarters to try to change its mind.
Led by Whiting and Anne Redstone of Ernst & Young, the delegates came from leading organisations such as the Chartered Institute of Taxation, the Institute of Chartered Accountants and the Federation of Small Businesses.
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