Hartnett claims advisers supported HMRC over Arctic
Here's a story that passed under the radar and for various reasons, we never got around to doing.
Dave Hartnett gave an interview in October to Tax Adviser magazine, the journal of the Chartered Institute of Taxation and the Association of Taxation Technicians.
In it, he got on to the subject of Arctic Systems, on which HM Revenue & Customs is noticeably vulnerable (it's not something they choose to talk about, I've noticed). Not only did they pick on a small firm with an old set of rules not designed for the purpose, they pursued it all the way to the House of Lords over just £7,000 and claimed, at the same time, that it wasn't a test case. Of course not.
So what did Hartnett have to say about this most sensitive of subjects?
'It was and still is a really important issue, and we tackled that case in a thoroughly professional way. I think it is really interesting the way that private sector tax professionals were split on Arctic Systems. Many agreed with us and many didn't.'
He then went on to say that ministers wanted to tackle the issue, which of course we now know.
There's two issues with his remarks. Firstly, many would question quite how 'professional' the tackling of this issue was. Some would say it was a dog's dinner.
But most provocative, I thought, was the suggestion that many tax professionals agreed with HMRC's attitude to Arctic Systems. I presumed that most tax professionals thought the arrangements of Geoff and Diana Jones were standard tax planning, and that it wasn't worth HMRC's while to tackle it, however well you could spin a line that there was an element of contrivance in it.
Am I wrong, or is Dave Hartnett?
Alex
I've argued HMRC have a point http://www.taxresearch.org.uk/Blog/2007/08/09/arctic-systems-moving-small-business-taxation-on-in-the-uk/
Mind you - I haven't agreed their approach
Nor do I expect to approve the outocme
And if it wasn't me, who the heck was it? :-)
Richard Murphy
Posted by :Richard Murphy | November 6, 2007 11:34 AM
If one draws a distinction between the technical law, the policy displayed by the Revenue/Treasury and the political arguments over fairness etc, there are a good number of professionals who felt the Revenue could make a valid argument on the law; it was a view expressed privately by some senior Revenue staff as far back as the mid 1990s, in my experience, and one which had filtered across the divide long before the Jones drew the short straw.
When it was apparent early on that the "bundle of rights" argument was going to be offered in defence, it remains a mystery to me why the Revenue did not manage a better job at tackling that head on. Of all Mrs Jones' rights in her bundle, were there any which had any real value, other than her right to receive the income ?
Posted by :ab | November 26, 2007 1:41 PM
Thanks for that ab. When Dave Hartnett came in the other week for Accountancy Age TV, he ticked us off for not doing our research and knowing that advisers had supported HMRC's position. He mentioned a Robert Maas article on the subject, and I was promised some cuttings of supportive comments. The cuttings have not as yet arrived, but I'll try and dig out the Robert Maas piece...
Posted by :Alex Hawkes | November 26, 2007 2:33 PM
A leading tax lecturer (quite a GOOD one) was on HM Revenue's side, I think that you will find.
Posted by :Timi | November 29, 2007 10:16 PM
Timi - I think you need to name names. Why so coy?
Posted by :Alex Hawkes | November 30, 2007 11:39 AM