The government intends to legislate in Finance Bill 2020 to ‘put beyond doubt’ the legal basis for HMRC’s use of large-scale automated processes for certain functions, such as issuing assessment and penalty notices. This follows a run of challenges in the courts on the grounds that the practice is not supported by legislation.
In a written statement on 31 October, HM Treasury said the legislation would have retrospective effect, ‘to close off the exchequer and operational risks presented by judicial challenges to HMRC’s ability to automate certain functions’. The legislation will specify that such notices are equally valid whether automated or issued by an officer of HMRC.
The following functions will be covered:
notice to file a return in relation to individuals, trustees and partnerships (TMA 1970 ss 8, 8A and 12AA);
correction of a personal or trustee’s return (TMA 1970 s 9ZB);
notice to file a return in relation to corporate bodies (FA 1998 Sch18); and
charging penalties under TMA 1970 s 100 and FA 2003 Sch 14 (SDLT).
This means the legislation will cover not only the automated process, such as the issue of a notice to file a self-assessment return, but also any subsequent actions including penalties and enquiries.
However, HMRC has confirmed that where taxpayers have received settled judgments from a court or tribunal concerning the use of automation by HMRC before 31 October 2019, they will not be subject to retrospective application of the proposed legislation.
Commenting on Twitter, tax barrister Keith Gordon said: ‘If only taxpayers had the right to apply a magic wand when they too have failed to comply with the law’.
‘HMRC are proposing to extend this retrospective treatment to all taxpayers who are in the middle of litigation on this very point – thereby rendering any such litigation wholly redundant and irrespective of what the judge was going to say,’ he added.
See Automated decisions: technical note, bit.ly/32lQOu7.
The government intends to legislate in Finance Bill 2020 to ‘put beyond doubt’ the legal basis for HMRC’s use of large-scale automated processes for certain functions, such as issuing assessment and penalty notices. This follows a run of challenges in the courts on the grounds that the practice is not supported by legislation.
In a written statement on 31 October, HM Treasury said the legislation would have retrospective effect, ‘to close off the exchequer and operational risks presented by judicial challenges to HMRC’s ability to automate certain functions’. The legislation will specify that such notices are equally valid whether automated or issued by an officer of HMRC.
The following functions will be covered:
notice to file a return in relation to individuals, trustees and partnerships (TMA 1970 ss 8, 8A and 12AA);
correction of a personal or trustee’s return (TMA 1970 s 9ZB);
notice to file a return in relation to corporate bodies (FA 1998 Sch18); and
charging penalties under TMA 1970 s 100 and FA 2003 Sch 14 (SDLT).
This means the legislation will cover not only the automated process, such as the issue of a notice to file a self-assessment return, but also any subsequent actions including penalties and enquiries.
However, HMRC has confirmed that where taxpayers have received settled judgments from a court or tribunal concerning the use of automation by HMRC before 31 October 2019, they will not be subject to retrospective application of the proposed legislation.
Commenting on Twitter, tax barrister Keith Gordon said: ‘If only taxpayers had the right to apply a magic wand when they too have failed to comply with the law’.
‘HMRC are proposing to extend this retrospective treatment to all taxpayers who are in the middle of litigation on this very point – thereby rendering any such litigation wholly redundant and irrespective of what the judge was going to say,’ he added.
See Automated decisions: technical note, bit.ly/32lQOu7.
