Clause 29 - Reduction of penalty under section 25 or 26
Finance Bill
11:00 am
Mr Stephen O'Brien (Eddisbury, Conservative)
Again, a representation has been made to us to make sure that this matter is put on the record, so that there is no question of it not being properly considered as part of our scrutiny. The Institute of Chartered Accountants of England and Wales recognised that the clause is intended to replicate section 70(4) of the VAT Act 1994 in respect of clauses 25 and 26. It is seriously concerned that, where penalties are considered to be of a criminal level, subsection (3)(c) would deny taxpayers a defence that goes to the heart of the motive test.
A penalty under the clause is relievable on the ground that the taxpayer had a reasonable excuse, but if the taxpayer is precluded from arguing that they acted in good faith, that sabotages any possible argument that they had a reasonable excuse. The denial of this defence, moreover, allows for a challenge on the ground of the infringement of human rights legislation and therefore weakens the clause. The ICAEW goes on to say that that comment would apply equally to any existing section 70 provisions that are applicable to penalties of a criminal level.
I raise the point on the same basis as on the previous clause.