< Back to previous page

Corporate law change could destroy tax system trust

Published on 12 Feb 2010 under category: legal

Retrospective action in the tax system could penalise law-abiding taxpayers, according to the taxation industry body.

Following the announcement of amendments to rules on manufactured dividends, the Chartered Institute of Taxation (CIOT) expressed concerns about how trust in the taxation system may be affected.

John Whiting, tax policy director at the CIOT, said: "The use of retrospective legislation always concerns us greatly; we think it damages the key principle of certainty in the tax system that is so important to its reputation and is inherently unfair.

"We can understand that at times the Government wants to take action to 'confirm the general understanding of the tax system' in the light of questions raised.

"However…we are taxed on what legislation says, not what HMRC thinks it says. Of course the taxpayer would have to sustain their interpretation in the Courts."

The financial secretary to the treasury, Stephen Timms announced the plans earlier this week to clarify the corporation tax treatment of manufactured payments received by companies in certain sale and repurchase transactions.

If you require advice on Commercial Litigation please call us on +44 (0)20 7831 0101 and ask for Andrew Pena.