UK contractors set to face retrospective taxation

Date: 13th September 2011

Contractors around the UK could be open to retrospective taxation following a landmark case at the Court of Appeal.

The Court recently ruled in favour of HM Revenue & Customs (HMRC) in a case where IT consultant Robert Huitson claimed the retrospective application of tax was a breach of his human rights.

Mr Huitson, who was part of an Isle of Man scheme run by Montpelier Tax Consultants, argued that he was entitled to relief from UK income tax on income received by him from a trust in the Isle of Man.

However, HMRC, which described the scheme as a widely marketed tax avoidance plan, believed it was within its rights to seek the taxes under Section 58 of the Finance Act 2008.

Dismissing the case, Lord Justice Mummery concluded: "The judge [in the High Court] was not wrong to conclude in his comprehensive, clear and excellent judgment that the retrospective provisions of the 2008 Act are proportionate and are compatible with Article 1.

"There are no grounds which would entitle this court to disturb it."

Posted by Thomas Fletcher