Shout99 Raises Alarm Over Back-Dated Tax Proposals

by Robin Pilgrim, LawAndTax-News.com, London

04 February 2005

In a report published this week, freelance industry group Shout99 warned that the UK Treasury may be planning to use new legislation to tax self-employed workers and businesses retrospectively.

Under the terms of a provision trailed in the Pre-Budget Report and by Paymaster General, Dawn Primarolo, the government would be able to introduce retrospective measures (backdated to December 2, 2004, the date on which the Pre-Budget Report was delivered) to ensure that employees and employers pay the 'proper' amount of tax, and make the correct national insurance contributions.

Initially, the move was thought to be targeting large bonuses paid to workers in the City. However, Shout99 expressed concern on Tuesday that the government now seems to be looking at a broader spectrum of taxpayers.

According to the report:

"Accountants have questioned who would define 'proper' and expressed concern at the shift from the principle that someone is taxed on what the law says at the time, not what is decided later."

The freelancers' group also drew attention to concerns regarding the retrospective aspect of the corrective legislation expressed by the Treasury Select Committee, which observed recently that:

"The Paymaster General's announcement that future legislation to outlaw Income Tax/NIC avoidance schemes not yet identified will be backdated to 2 December 2004 raises significant issues."

The Select Committee statement continued:

"We support the Government's determination to tackle unreasonable tax avoidance schemes, which can have the effect of penalising the general public, but we recognise that some experts have indicated that their approach could lead to challenges in the courts."

Recommended