Budget Notes


Who is likely to be affected?

1. Individuals, organisations and businesses.

General description of the measure

2. The decision in the case of 'The Queen (on the application of John (Wilkinson) v. The Commissioners for Her Majesty's Revenue and Customs' ('Wilkinson') made clear that the scope of the discretion of HM Revenue & Customs (HMRC) to make concessions from the strict application of tax law is not as wide as had previously been thought.

3. HMRC has been reviewing its concessions in the light of the Wilkinson judgment and that review is expected to be completed in the autumn. The majority of HMRC's concessions are clearly within the scope of its "collection and management" discretion and so can continue to operate as they are.

4. Indications are that when the review is completed it will be possible to legislate a substantial proportion of the remaining minority and so enable the tax treatment they afford to continue. Legislation will be introduced in Finance Bill 2008 to provide for existing HMRC concessions (which include concessions operated by HMRC's predecessor departments of Inland Revenue and HM Customs & Excise) to be made statutory by Treasury order. Details of the outcome of the review, including those extra statutory concessions to be legislated by order, will be available later in the year.

Operative date

5. This power will be operative on and after the date that Finance Bill 2008 receives Royal Assent, but no orders under this power are expected to be made until after HMRC's review of its concessions has been completed.

Current law and proposed revisions

6. At present there is no enabling power of this kind to allow existing concessions to be legislated by order.

7. In the context of this measure:

•    "existing HMRC concession" - means any statement made by HMRC (before the enactment of this measure) which allows a person a reduction in liability to tax or duty, or allows any other concession in relation to tax or duty to which there is no legal entitlement; and

•    "statement" - means statement of any sort however described.

8. Any order under this power will be made only if a draft of that order has been laid before, and has been approved by a resolution of, Parliament.

Further advice

9. If you have any questions about this change, please contact David Stephens on 020 7147 2402 (email: david.stephens@hmrc.gsi.gov.uk). Information about Budget measures is available on the HM Revenue & Customs website at www.hmrc.gov.uk