The government has decided to drop the controversial instances of the term
thinks’ from the finance bill.
The wording, which was used often in the bill in relation to tax penalties,
was strongly criticised by the tax profession for opening up the possibility
that HMRC would not have to base a decision on fact.
The Chartered Institute of
Taxation welcomed the move, stating that the decision will make the
legislation work better.
CIoT president Rob Ellerby said: ‘Where penalties are concerned, the test
should always be objective rather than subjective. We believe that in the
proposed legislation the words ‘HMRC think that’ are superfluous. The words come
from legislation where the inspector is exercising judgment. In the case of
penalties, that is not the position. Either there has been an offence giving
rise to a penalty or there has not.’