The House of Lords decision in 2005 in the case Wilkinson v Inland Revenue raised issues concerning HMRC’s powers to make extra-statutory concessions.  Within its remit of collecting taxes, HMRC has “wide managerial discretion as to the best means of obtaining for the national exchequer from the taxes committed to their charge, the highest net return that is practicable having regard to the staff available to them and the cost of collection.”

This discretion allows HMRC to deal pragmatically with minor or temporary anomalies, marginal cases of hardship and situations where a statutory rule is difficult to define or would take excessive Parliamentary time to enact.  Such arrangements are published by HMRC is the form of extra-statutory concessions (ESCs).

In their judgement, the Lords suggested that the Revenue Commissioners may have exceeded their powers in respect of some ESCs.  As a result, HMRC has reviewed its published concessions and is of the view that most ESCs are within its discretion.  However, there are question marks over some ESCs and HMRC has published a consultation document that considers the ESCs that may need to be withdrawn, in whole or in part, and others that, if they are to remain, must be moved into legislation.

All of the ESCs that are being considered for legislation, with one exception, relate to taxes other than income tax.  The only income tax-related ESC is one that makes travel and subsistence costs for self-employed persons allowable where occasional business journeys occur outside the normal pattern of work.  The intention is to move this ESC into legislation.

There are no ESCs included for consultation that relate to payroll or the provision of benefits and expenses in employment.

Further information:
Extra-statutory Concessions – Technical Consultation on draft Legislation
Wilkinson v Inland Revenue

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The UK Payroll News is sponsored by HRD & Payroll Solutions

Written by Ian Congreave -

Filed under: Extra-Statutory Concessions on November 17th, 2008

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