MPs urged to tackle retrospective tax rule Section 58

Dozens of MPs have been called to take a range of actions against Section 58 of the Finance Act 2008 – a tax rule that for being imposed retrospectively threatens thousands of IT contractors with bankruptcy.

At a meeting on Tuesday in the Palace of Westminster, about 60 MPs were invited to sign a cross-party letter to exchequer secretary David Gauke, stating their opposition to the backdated legislation.

No To Retro Tax, which organised the meeting, also urged the MPs to support a complaint it will lodge to the Parliamentary Ombudsman about the conduct of Revenue & Customs, following the emergence of new evidence that undermines its justification for the backdating.

A NTRT spokesman explained: “The meeting [was] used to present new evidence which has been uncovered on the original ‘intend of Parliament’ in the Padmore case, which demonstrates irrefutably that it was the intention of Parliament in 1987 to allow the tax arrangements to remain in place.”

This is significant, the spokesman outlined, because the fresh evidence contradicts claims made at the time of Section 58 that the scheme was seen by HMRC as “abusive” and that its officials had always challenged it.

Even the Labour minister who announced S58 on Budget Notice 66 (BN66), Jane Kennedy, said at the time that “HMRC has not consistently made the case throughout the time period that the scheme does not work,” the MPs were told this week.

Approached by a person caught by the legislation in 2010, Ms Kennedy admitted that she was told by officials that only a “very few people” would be affected and, subsequently in 2012, that she “did not have time to consider everything” because it was the “busiest Budget ever.”

But these admissions, alongside the new evidence, will provide little comfort to the 67 per cent of individuals affected by S58 who say they are unable to pay their hefty liabilities because they are backdated. A NTRT survey, shown to the MPs, also found that almost half (45 per cent) will be forced out of their homes and 30 per cent will go bankrupt.

To help the “victims” – contractors and other people in UK constituencies who were following the law as it stood at the time, the MPs were urged to support an amendment to Finance Bill 2013 designed to remove the retrospective element of S58.

They can also individually make their views known to Mr Gauke and the Treasury which, following an invitation by NTRT chair Alistair Renshaw, has agreed to meet the campaign group and those affected by BN66.

Editor's Note: Further Reading - HMRC to grill Montpelier clients under caution


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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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