Inland Revenue Suspends Hansard Principle After Appeal Court Ruling

by Jason Gorringe, for LawandTax-News.com, London

29 August 2003

British taxpayers and the Inland Revenue have been dealt a blow following an Appeal Court ruling that has lead to the suspension of the so-called 'Hansard Principle' of tax dispute settlements.

The Hansard Principle, first used back in 1944, is a kind of 'fast track' dispute settlement procedure between the Inland Revenue and the taxpayer which allows the taxpayer to own up to tax evasion or other misdemeanours and escape with a fine rather than a complex and lengthy investigation, an arrangement that is considered amenable to both parties.

However, after the ruling in the Gill and Gill case, in which two brothers successfully argued that by using the Hansard Principle they were unknowingly admitting to tax evasion, the Revenue has suspended the use of this procedure for "practical reasons" until the full implications of the judgement have been assessed, an IR spokesman told the Daily Telegraph.

Many tax experts feel the judgement is a blow for a common sense approach to dispute resolution. "The settlement system is pragmatic and worked to the advantage of both parties for many years," Stephen Camm, tax investigations partner at PricewaterhouseCoopers, revealed in a Times report. "Although the new ruling is designed to protect taxpayers, they are not going to relish the prospect of receiving a criminal caution. They will be reluctant to play ball and the whole process will be protracted and fraught with difficulties."

The repercussions of the Appeal Court decision will also be felt at the Revenue who use Hansard, so called due to the first mention of the procedure in the parliamentary journal in 1944, to solve about 300 cases every year, adding an extra £100 million to the Treasury coffers as a result.

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