Pre-Budget Report: Equitable Liability

This is relatively unknown measure, other than to tax professionals. Taxpayers who have received "determinations" of tax from HMRC, and who are out of time to file their tax returns, can apply for the application of "Equitable Liability" where they can demonstrate that the tax charged by the determination is excessive. Until now, this use of equitable liability by HMRC has been by concession. The proposed legislation will enable HMRC to continue to use this measure on a statutory basis. In the meantime, the current concession will continue to apply until the new law is in place.

Comment: There had been some fear that this measure was to be withdrawn completely. Putting this onto a statutory basis is welcomed. Understandably, there are quite stringent conditions to the application of this concession, and this is expected to continue into the statutory provisions.