The London-based Professional Contractors Group is prioritising duty of care for HMRC, as well as the tax charter, income shifting, and the EU legislation regarding contractors abroad as top targets for 2008.
HMRC Should Be Responsible
Many of the issues that confront contractors in the coming year are tax related. We are again targeted by the Treasury with income shifting legislation, and yet there are still no legal safeguards for us to rely on when the Revenue attacks us without justification.
One proposal that is intended as a remedy for this is the ''Tax Charter,'' a document to be produced by the Revenue and the Treasury which lays out taxpayer rights and responsibilities. HMRC clearly intend that the Tax Charter should provide us with some protection
''But the Tax Charter is not enough,'' insists PCG managing director John Brasier. ''We have made it very clear that we wish to see much tougher safeguards to protect taxpayers from HMRC and HMRC have obviously taken notice. We will be working closely with them to ensure that the new Charter has teeth, and that tax inspectors will be held accountable when they breach it.''
Duty of Care Needed
In order to make HMRC responsible for its action, the imposition of 'duty of care' is needed. This means that the Revenue should be considered as having a legal responsibility for the welfare of those--we taxpayers--who have dealings with it. The police have duty of care, for example, for the civilians they work with.
What is really needed is duty of care so that taxpayers can obtain proper redress when HMRC harms their interests
John Brasier-PCG
Brasier and the PCG are lobbying parliament to see that duty of care is placed upon the Revenue. ''We still believe, however, that what is really needed is a duty of care on HMRC, so that taxpayers can obtain proper redress when it harms their interests.'' PCG is eagerly awaiting the report of the Law Commission on this subject. The Commission is due to issue a report this month which is expected to recommend a legal structure in which HMRC, along with other public agencies, is to be held responsible--this report is then recommended to the Government which is not obliged to make it law. But PCG will then lobby for its adoption by the Government.
Dealing With Income Shifting
Another priority for PCG in the coming year is the fraught issue of income shifting, the Treasury's attempt to prevent small businesses from distributing dividend income between spouses or partners.
PCG has circulated a petition against the proposal, but the Government appears to be bound by political circumstances to enacting this legislation, despite the avalanche of protest not just from small business organisations, but from every group of tax experts in England, Wales, and Scotland.
''Nonetheless we are working hard in the consultation period to achieve changes to this proposal,'' says John Kell, policy director at PCG. It is possible that PCG will be able to obtain useful changes in the drafting as the bill proceeds through the legislature.
We are working hard to obtain changes to the income shifting proposal
John Kell-PCG
The Muscles in Brussels
Another area in which PCG is intervening is in the drafting of the EU Services directive, a bit of regulation from Brussels which directly affects UK contractors with limited companies who seek to provide services in other EU Member States. The legislation which has been six years in the making, should streamline the regulations which a UK contractor has to comply with in these other countries. A nearly final proposal is in the works, and watch this space please for the news when it is ready. ''This is an important piece of legislation for contractors and we are very involved in determining its form,'' Kell adds.