Equitable liability replaced by a statutory ‘special relief’
With effect from 1 April 2011, equitable liability has been replaced by a new, statutory, special relief. HMRC have now published a Revenue & Customs Brief entitled‘HM Revenue & Customs (HMRC) guidance on Special Relief’ as well as internal guidance on the new relief.
The purpose of the equitable liability concession was to provide a ‘relief of last resort’ for certain taxpayers, particularly vulnerable taxpayers who were unable to fully engage with the tax system, for a number of different reasons.
There are three particular conditions which must be met for special relief to be available. These reflect HMRC’s former practice in applying equitable liability.
The conditions are:
- In the opinion of the Commissioners it would be unconscionable for HMRC to seek to recover the amount which has been charged by a determination, or refuse to repay it if it has already been paid.
- The person’s tax affairs are otherwise up to date or arrangements have been made to the satisfaction of the Commissioners, to bring them up to date as far as possible.
- The person has not previously claimed special relief or sought equitable liability – whether or not relief was given.
HMRC will no longer accept new requests for equitable liability. The last claims made would be those received prior to 1 April 2011.