Extra statutory concessions update
In a 2005 House of Lords case, the UK courts held that HMRC must properly apply UK law. This decision by the courts specifically affected the area of Extra Statutory Concessions (ESCs) published by HMRC. The Courts do not appear to allow HMRC to use a discretionary approach (such as an extra statutory concession) even in cases where such an approach benefits taxpayers.
In order to be sure that ESCs will continue to have legal effect HMRC have decided they need to be drafted into law. HMRC recently published a summary of responses relating to the third technical consultation on draft legislation. The consultation document asked for comments on draft legislation designed to legislate for the effects of 7 existing ESCs and sought views on whether the draft legislation successfully maintained the effects of these existing ESCs. The draft legislation will be laid before Parliament in due course. One of the ESCs included in the consultation will not be legislated for at this stage.
HMRC also published a response to the consultation on the draft legislation for the concessionary treatment known as Equitable Liability. 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, for a number of different reasons. The concession only applies in limited circumstances.