Would HMRC have broken the law?

HMRC have published Revenue & Customs Brief 21/10 which outlines how hotel booking agents can operate in a way that allows their business clients to recover the VAT on hotel bills. This would clearly reduce the VAT bill of any business using hotel booking agents’ services. So would HMRC have transgressed the rules they had laid out in draft on deliberate wrongdoing by tax agents.

Under the draft legislation a tax agent was defined as anyone who suggested a way in which another person could reduce their tax liability. There was no need for there to be any payment for the advice.

This would suggest that if that legislation was in place HMRC would, by issuing this Revenue & Customs Brief, have broken its own rules and would therefore have to fine itself for deliberate wrongdoing!

In addition, given the amounts of tax involved, it would appear that HMRC would also have to add itself to the published list of deliberate wrongdoers – they’d be named and shamed!

What are your views on this? Add a comment – I’d love to read what you think about this.

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