Pressure from campaign group ‘No to Retro Tax’ may have finally paid off as MP’s call on the Government to withdraw the retrospective element of section 58 of the 2008 Finance Act.
Many contractors affected by the legislation have been threatened with bankruptcy and legal cases against scheme providers have been ongoing for over 5 years.
Original arrangements for contractors tax affairs were approved by Parliament back in 1987. Then in 2008, Labour pointed their fingers at contractors accusing them of being guilty of ‘tax avoidance’ with punishment that stated the legislation introduced would be ‘treated as always having had effect’, determining that tax owed could go back many years and be subject to both interest and penalties, resulting in some contractors ending up with six figure tax bills.
18 MP’s showing inter-party co-operation (a rare thing!) addressed George Osborne highlighting concerns over the use of retrospective tax legislation. All 18 MP’s agreed that tax avoidance should not be tolerated and anyone found utilising tax avoidance schemes should be penalised; however retrospective changes to law are ‘against natural justice and people should be judged under the law as it stood at the time’.
Let’s see if the Government use this year’s budget to amend the retrospective nature of Section 58!