The Chartered Institute of Taxation (CIOT) has hit out at HMRC for a draft penalties legislation clause.
New legislation in the 2007 Draft Finance Bill means that a taxpayer is liable to pay a penalty "if HMRC think" that a wrongdoing has been committed.
This is "a significant shift from the taxpayer actually doing or omitting to do something," the CIOT notes, equating it with the Red Queen in Alice in Wonderland who said: "Sentence first, verdict afterwards."
The move has been criticised by other bodies besides the CIOT and HMRC itself even admitted that the new wording was causing disquiet.
Test should always be objective
John Cullinane, CIOT president, explained the institute's point of view: "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 judgement. 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. The penalty follows from what the taxpayer did and from nothing else. These words are not needed."
The CIOT sees its primary purpose as being "to promote education in and the study of the administration and practice of taxation".
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