Tax plans 'breach human rights'

TOP TAX lawyers believe that Government attempts to clamp down on tax avoidance schemes could be illegal and may lead to a breach of human rights.

Tory politicians have seized on the suggestion to attack Chancellor Gordon Brown‘s efforts to stop people taking tax advice to minimise their tax bills.

Shadow Chief Secretary to the Treasury Howard Flight said senior counsel opinion had identified potential human rights issues that could derail the Government‘s efforts to clamp down on avoidance schemes.

He has called on Parliament‘s human rights committee to examine the full implications of the Chancellor‘s get-tough approach to tax avoidance.

Flight announced the appeal to the Joint Lords and Commons Committee during a furious row in Parliament in a debate on the tax bill.

Paymaster General Dawn Primarolo denounced Flight‘s plans, saying that taxpayers who take advice before they employ avoidance schemes should be aware of the consequences if a Government decided to enforce the tax system as it was designed to operate.

But Shadow Paymaster General Mark Prisk told This Is Money that the Government‘s 'excessive and heavy-handed' approach to tax avoidance ran the risk of alienating law-abiding taxpayers.

'It's all right to close down avoidance schemes from the date of the announcement that they were going to do this but to go back to tackle schemes that were already in place is not right.'

'The Chancellor is making a fundamental mistake, which is to take the view that anyone who pays for some tax planning advice from an accountant is somehow cheating the system. This is an extremely dangerous move in our view because it lumps criminal activity together with reasonable tax planning, which is a legitimate activity. It is that confusion between illegal tax evasion and legitimate tax avoidance that is getting blurred.

'What we want to know is whether the measures going through in the finance bill to clamp down on avoidance are watertight and don‘t breach the European Convention on Human Rights. If not, a crude clampdown will lead to potential chaos if legislation becomes subject to a challenge via the human rights court because everything will unravel.'

Prisk said the Tories particularly objected to the retrospective nature of the Government‘s efforts to clamp down on avoidance schemes.

He added: 'What lies at the root of this Government clampdown is a £33bn hole in public finances and the Chancellor is doing everything he can to plug it. There has also been a policy change and what we are seeing is the Old Labour nature of Gordon Brown seeping out.'