NEWS .

BRITISH COURTS ALLOWED RETROACTIVE PUNISHMENT FOR TAX VIOLATIONS

British Supreme Court has ruled that Her Majesty Revenue and Customs Service may impose retroactive fines on independent contractors for tax violations.
Robert Huitson, a self employed IT consultant, has sued the HMRC for alleged violation of his civil rights. He claims that over the years HMRC had multiple opportunities to stop the usage of offshore business scheme based on trusts registered at the Isle of Man. Opposite his claims, the HMRC representatives argue that the actions are lawful, and aimed at preventing tax offenders from using “wholly artificial” business structures.
HMRC advocates point out that using the offshore scheme allowed Huitson to pay taxes at the 3.5% rate of his taxable earnings. Therefore, they claim, every British self-employed professional could utilize similar approach to cut tax liability dramatically. Huitson himself began using the scheme in 2001, and the state has imposed a 100,000 pounds fine on him. Nearly 2500 other self-employed professional used the same scheme, marketed by a company registered at the Isle of Man. The combined amount of fines for this group might reach 100 million pounds.
PCG (Professional Contractors Group), a non-profit organization guarding the interests of self employed professionals, is worried that the court ruling exposes a wide range of professionals to retroactive punishment. Chris Bryce, PCG chairman, stated that HMRC failed to take action for many years despite knowing about the usage of offshore schemes. GPC strongly objects retroactive prosecution of professionals for using the business structures that were legal at the time of their registration.
Robert Huitson plans to appeal this court ruling.