A break for the confused taxpayer

The Inland Revenue has responded to calls for guidance, says Roger Trapp

It is often assumed that tax accountants love confusion and complexity, since they would give them plenty of opportunities to practise their art. For their part, the professionals themselves are keen to stress a fondness for certainty.

And that view is clearly apparent from the Chartered Institute of Taxation's response to the Inland Revenue's consultative document on pre-transaction rulings, or the means by which the organisation gives guidance to tax payers on how a particular tax situation will be treated. Indeed, the institute points out that it has called for a rulings system for some time - especially in the recent book A Request for Rulings by its research fellow Daniel Sandler.

"A rulings system can contribute to the certainty a tax system should have - particularly when that system is a complex one that operates in a complex environment, as is the case in the UK," the institute says in the response published last week.

The document follows the revenue's publication of a somewhat tentative paper on the subject late last year. Its author, Simon Oakes, describes it as a "high-level document" that does not propose the introduction of a specific scheme. Instead, it reviews the reasons for the pressure for reform and looks at different approaches to introducing rulings.

As that document describes, the Inland Revenue in effect already gives pre-transaction rulings that taxpayers can rely upon in certain circumstances. These fall into two categories: statutory clearances and approvals, and informal rulings on the interpretation of the law in other circumstances, in accordance with guidelines set out some time ago. However, this situation falls short of what would be provided under a formal rulings scheme. In particular, such a change would make the rulings more comprehensive and more structured.

Much more attention, though, has been focussed on the revenue's concerns about tax avoidance. This was prompted by the devotion of a section of the paper to the introduction of a general anti-avoidance provision along the lines of those that exist in other countries, notably certain members of the Commonwealth.

This section points out that countries such as Australia and New Zealand, which do rule on avoidance, have general anti-avoidance provisions; that broadly drafted general anti-avoidance provisions add to the uncertainty those involved are seeking to reduce; and that the attitude of the courts "would be a crucial factor in determining the scope and effectiveness" of such a provision.

But having set out the ground, it holds back from actually coming to a view. Mr Oakes merely says: "What is tax planning and what becomes abuse of the tax law is not easy to determine."

The institute is not nearly so ambivalent. Pointing out that any system under which an individual or company obtains an Inland Revenue decision on how it will be treated beforehand should be properly resourced and strike the correct balance between the taxpayer's and the authorities' interests, it says: "The institute does not believe that a rulings system would lead to greater tax avoidance."

John Whiting, the Price Waterhouse partner who is chairman of the institute's technical committee, adds: "We believe a formal rulings system is part of a modern tax system; together with such statutory clearances as there are and the current informal guidance the revenue will give in some areas, there will be proper mechanisms for the taxpayer to comply with self-assessment and other responsibilities."

Though he goes on to say that he looks for a speedy announcement of the intention to introduce a rulings system, he cannot be expecting things to happen so soon. The paper is, as he stresses, "the start of the debate on this issue".

Certainly, Mr Oakes is expecting to have to do more work following the deadline for responses at the end of this month before the matter is completely dealt with.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

Sport
Luis Suarez and Lionel Messi during Barcelona training in August
footballPete Jenson co-ghost wrote Suarez’s autobiography and reveals how desperate he's been to return
News
newsMcKamey Manor says 'there is no escape until the tour is completed'
Voices
Hunted: A stag lies dead on Jura, where David Cameron holidays and has himself stalked deer
voicesThe Scotland I know is becoming a playground for the rich
News
people
PROMOTED VIDEO
Arts and Entertainment
Architect Frank Gehry is regarded by many as the most important architect of the modern era
arts + entsGehry has declared that 98 per cent of modern architecture is "s**t"
Money
Welcome to tinsel town: retailers such as Selfridges will be Santa's little helpers this Christmas, working hard to persuade shoppers to stock up on gifts
news
Arts and Entertainment
Soul singer Sam Smith cleared up at the Mobo awards this week
newsSam Smith’s Mobo triumph is just the latest example of a trend
News
Laurence Easeman and Russell Brand
people
Sport
Fans of Dulwich Hamlet FC at their ground Champion Hill
footballFans are rejecting the £2,000 season tickets, officious stewarding, and airline-stadium sponsorship
News
Shami Chakrabarti
people
Arts and Entertainment
Benedict Cumberbatch has refused to deny his involvement in the upcoming new Star Wars film
filmBenedict Cumberbatch reignites Star Wars 7 rumours
Sport
football
News
news
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Compensation and Benefits Manager - Brentwood - Circa £60,000

    £60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...

    Data Analyst/Planning and Performance – Surrey – Up to £35k

    £30000 - £35000 Per Annum plus excellent benefits: Clearwater People Solutions...

    IT Systems Business Analyst - Watford - £28k + bonus + benefits

    £24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...

    Markit EDM (CADIS) Developer

    £50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

    Day In a Page

    Wilko Johnson, now the bad news: musician splits with manager after police investigate assault claims

    Wilko Johnson, now the bad news

    Former Dr Feelgood splits with manager after police investigate assault claims
    Mark Udall: The Democrat Senator with a fight on his hands ahead of the US midterm elections

    Mark Udall: The Democrat Senator with a fight on his hands

    The Senator for Colorado is for gay rights, for abortion rights – and in the Republicans’ sights as they threaten to take control of the Senate next month
    New discoveries show more contact between far-flung prehistoric humans than had been thought

    New discoveries show more contact between far-flung prehistoric humans than had been thought

    Evidence found of contact between Easter Islanders and South America
    Cerys Matthews reveals how her uncle taped 150 interviews for a biography of Dylan Thomas

    Cerys Matthews on Dylan Thomas

    The singer reveals how her uncle taped 150 interviews for a biography of the famous Welsh poet
    DIY is not fun and we've finally realised this as a nation

    Homebase closures: 'DIY is not fun'

    Homebase has announced the closure of one in four of its stores. Nick Harding, who never did know his awl from his elbow, is glad to see the back of DIY
    The Battle of the Five Armies: Air New Zealand releases new Hobbit-inspired in-flight video

    Air New Zealand's wizard in-flight video

    The airline has released a new Hobbit-inspired clip dubbed "The most epic safety video ever made"
    Pumpkin spice is the flavour of the month - but can you stomach the sweetness?

    Pumpkin spice is the flavour of the month

    The combination of cinnamon, clove, nutmeg (and no actual pumpkin), now flavours everything from lattes to cream cheese in the US
    11 best sonic skincare brushes

    11 best sonic skincare brushes

    Forget the flannel - take skincare to the next level by using your favourite cleanser with a sonic facial brush
    Paul Scholes column: I'm not worried about Manchester United's defence - Chelsea test can be the making of Phil Jones and Marcos Rojo

    Paul Scholes column

    I'm not worried about Manchester United's defence - Chelsea test can be the making of Jones and Rojo
    Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

    Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

    While other sports are stalked by corruption, we are an easy target for the critics
    Jamie Roberts exclusive interview: 'I'm a man of my word – I'll stay in Paris'

    Jamie Roberts: 'I'm a man of my word – I'll stay in Paris'

    Wales centre says he’s not coming home but is looking to establish himself at Racing Métro
    How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

    A crime that reveals London's dark heart

    How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?
    Meet 'Porridge' and 'Vampire': Chinese state TV is offering advice for citizens picking a Western moniker

    Lost in translation: Western monikers

    Chinese state TV is offering advice for citizens picking a Western moniker. Simon Usborne, who met a 'Porridge' and a 'Vampire' while in China, can see the problem
    Handy hacks that make life easier: New book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone

    Handy hacks that make life easier

    New book reveals how to rid your email inbox of spam, protect your passwords and amplify your iPhone with a loo-roll
    KidZania lets children try their hands at being a firefighter, doctor or factory worker for the day

    KidZania: It's a small world

    The new 'educational entertainment experience' in London's Shepherd's Bush will allow children to try out the jobs that are usually undertaken by adults, including firefighter, doctor or factory worker