Contractors, join our big push against the 'pay-up first' avoidance rule
Contractors who believe it is wrong to be penalised simply for following the law as it stood at the time are those I immediately need help from in trying to make the proposed ‘pay-up first’ avoidance rule less draconian, writes Alistair Renshaw, chairman of No To Retro Tax.
My urgent request is that you use a letter template we have provided to write to your MP, calling to amend measures in this year’s Finance Bill, which will arm the taxman with what he calls a “ground-breaking new power” - Accelerated Payment Notices (APNs).
Under the power, any contractor with an open tax enquiry or who has used a DOTAS or GAAR scheme which is being questioned by the taxman will have to make an ‘accelerated payment’ and pay the money up front, before any arguments have been heard in the courts.
This is deeply concerning because, if granted, this retrospective power means HM Revenue & Customs will be able to demand any arbitrary amount of disputed tax going back ten years, with no right of appeal for the taxpayer. Some APNs could be issued as early as September.
What you mustn’t do on this issue is accept the claims of the Exchequer Secretary. He says that these measures, contained at Clause 192 onwards in the Finance Bill, are not retrospective. But the changes will in fact apply to any legitimate and registered tax planning arrangement entered into as far back as 2004, and retrospectively change the way that tax disputes are dealt with.
By using our template as a basis to write to your MP, you can reduce the prospect of them being misled about this fundamental change to tax law and, more importantly, back two important amendments to the legislation that we, joined by tax experts, are proposing.
Firstly, you will be supporting an amendment to introduce an independent appeals process. As the legislation currently stands, a taxpayer can only appeal on the ground of process (i.e. the APN was sent to the wrong address), not the amount claimed or whether it should be payable. Secondly, you will be supporting an amendment with the effect that APNs would only be issued for tax planning carried out after the legislation receives Royal Assent.
In other words, my request is that you ask your MP to push for taxpayers who receive APNs to have a proper way to appeal, and that you ask them to support the legislation being implemented prospectively, rather than retrospectively. Surely it is perfectly reasonable that any new tax legislation should only apply going forward, not to those cases which are already in the system.
So access the template and amend where appropriate, making it as bespoke as possible, and then send it to your MP. It is crucial that you (and as many people as possible) write to MPs about this deeply concerning issue over the next few days.
Some contractors may say we’ve been here before. In fact, I understand that a lot of NTRT members have engaged in protracted correspondence with their MP and may be reluctant to do so again. However, it is vital for people’s livelihoods that we give this issue another big push. Do be reassured though, because we have others on our side (including the CIOT, the ATT and the ICAEW) who are also lobbying against the introduction of further retrospective legislation. So we are part of a much bigger effort -- but yours would be greatly appreciated.
You can view the template letter here.