Contractors have lost their campaign to amend the retrospective tax legislation Section 58(4) in the Finance Bill, as the amendment to change the law was withdrawn during a House of Commons Finance debate [BN66 debate starts at 16:05].
Despite the committee recognising that “many subscribers [to the tax avoidance scheme] would have relied on professional advice with a great deal of good faith” and that “at the time it was lawful until the time the retrospective legislation was put in place”, there was still “little sympathy with the scheme”.
The committee was also represented with evidence that the Judicial Review into the retrospective impact of BN66 had failed, and that Section 58(4) was introduced as a ‘clarification’ of legislation pre-dating the tax avoidance scheme.
As a result, the Finance Bill clause to amend Section 58(4) so it no longer acted retrospectively was withdrawn. This would appear to leave the 1,900 tax avoidance scheme participants due to pay significant back taxes and fines.
ContractorCalculator will be publishing further analysis about the implications of the committee’s actions.