In last year’s Pre-Budget report, the Labour Government confirmed that the concessionary treatment known as Equitable Liability is to be given a statutory basis rather than withdrawn as had been originally announced. The current Government have now confirmed that they will honour the previous Government’s commitment.
A consultation document has been published which includes draft legislation. Interested parties are invited to submit their comments on the document and legislation by 1 October 2010.
The purpose of the equitable liability concession is to provide a “relief of last resort” for certain taxpayers, particularly vulnerable taxpayers who are unable to fully engage with the tax system.
HMRC have previously confirmed that the current concession will remain in force until the new legislation is in place. This is intended to maintain the existing tax treatment currently afforded by the concession.
The concessionary treatment will only be granted where HMRC are convinced that it would be wholly unreasonable to pursue the tax that is legally due and the following conditions are met by the taxpayer:
- can demonstrate that the figure of tax due is excessive;
- can demonstrate what the correct amount should have been; and
- brings all tax affairs up to date, including payment of tax, interest and penalties.