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That’s Outrageous! Why Is the Taxman Above the Law? Everyone makes mistakes—even the Inland Revenue. But if they do, you may pay the price By Clive Coleman Neil Martin is an ordinary man who, in January 1999, made a routine business decision: after ten years as a sole trader, he took the advice of his accountant and turned his successful building business into a limited company.
The transition should have gone like clockwork, except that Martin’s new company needed a Construction Industry Scheme certificate from HM Revenue and Customs to be paid in full by his clients. According to Martin, the delays and errors by the Revenue in granting that certificate caused his business to lose more than £500,000. The Revenue admitted mistakes and delays, but wouldn’t reimburse his losses. So Martin did something unthinkable and well-nigh unprecedented—he sued the Revenue in the High Court.
The judgement handed down was extraordinary because in layman’s terms it amounted to this: no matter how dilatory the Revenue had been, no matter how many mistakes it had made and how much Martin’s business had suffered as a result, the Revenue didn’t owe him or his business a duty of care. Effectively, it cannot be sued. “I can’t think of any other public authority that is immune in this way,” says Glyn Maddocks, Martin’s solicitor. “The health service, the ministry of defence and schools all owe a duty of care to those affected by their negligence. No one can understand why the Revenue should be uniquely exempt.”
And it really does appear that HM Revenue and Customs, the government body that exercises enormous power over the financial affairs of every individual and business in the country, has a unique legal status. Every self-assessment tax payer is deemed responsible for paying the correct amount of tax, even if the Revenue makes incorrect demands or overpayments. And this extends to those receiving tax credits too. Page 1 of 2
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