IT contractors have poured praise on a Tory MP for standing up against retrospective tax measures.
Nigel Mills, the parliament member for Amber Valley, has forced David Gauke to defend the government’s decision to backdate tax under the Section 58 rule, which ended once-legal taxation schemes used by many contractors.
Mr Mills urged the exchequer secretary to reconsider the taxation plans it had taken on by the previous Labour government, and although his proposal has been rejected at this stage it has managed to create debate on the issue.
The objective, Mr Mills said, was simply to “get some comments from the minister on the record about an issue of concern to many".
“The new clause asks the government to go back and consider whether what was done was consistent with how the government now think we should use retrospection, if at all,” he added.
“Was the impact on those individuals fair and reasonable? Would we not be better off changing the law to close the scheme down from the date of the announcement in 2007, then litigating under the old rules to find out whether the scheme was legal? We would normally do things in that way, which would be better and fairer for the taxpayer.”
Mr Gauke, however, responded: “HMRC was quite clear that the legislation would not apply to individuals, other than those seeking to avoid tax through the scheme. Let us be clear, HMRC was challenging the scheme, so its users should have taken reasonable precautions to ensure that they had funds to meet their liabilities.”
Despite this, critics of Section 58 like the lobby group No To Retro Tax, believe that more opposition to retrospective taxation measures is likely to be seen when a report on the bill is published and opened to all MPs later this year.