Howard accuses Brown of chaos as 1.7m family firms face Section 660 doubt

Michael Howard, the Shadow Chancellor has written to the Chancellor; Gordon Brown accusing him of creating chaos with Section 660 and leaving 1.7 million family firms in doubt over tax bills

Commenting on updated Inland Revenue guidance on Section 660 and a letter to the Conservative Treasury team from the Paymaster General, Dawn Primarolo, about a reported Inland Revenue crackdown on family businesses that share incomes equally between partners, the Shadow Chancellor, Michael Howard said:

'The Chancellor is presiding over chaos and confusion in his revenue collecting agencies. Customs and Excise is in chaos over collapsed trials, questioned guidance and judicial review. The Inland Revenue is in chaos over the Child Tax Credit. Now the Revenue has been forced to issue "clarified" guidance on the tax treatment of family-run businesses, creating uncertainty for hundreds of thousands of business people who could face – and in more and more cases are facing – back-dated tax bills up to tens of thousands of pounds.'

'I have written to the Chancellor to ask for him to get a grip on his department. His policies have created the chaos. It's time he got his house in order.'

Complete text of letter from Michael Howard:

Dear Chancellor

I am writing about the latest bout of chaos and confusion in your tax collection agencies. You will be aware that the Inland Revenue's Tax Bulletin released clarified guidance on 17th April on the tax treatment of family businesses where shares and dividends are split equally between business partners who are also partners in marriage. You will also be aware that in a letter received yesterday, the Paymaster General told my colleague, Mark Prisk, that there is "neither a new policy nor any change in policy in the application of the settlements legislation". I have a number of questions.

If there is no change in policy, why has there been an obvious change in outcome with the recent large number of back tax demands for family businesses, with cases involving tens of thousands of pounds? Why have you been driven to clarify the rules in the Revenue Bulletin?

Do you accept that up to 1.7 million family businesses will need to be aware of this updated guidance? How will you ensure that this latest uncertainty about tax treatment does not further stifle the enterprise culture to which you so frequently pay lip service?

Customs and Excise is in chaos over collapsed trials, questioned guidance and judicial review. The Inland Revenue's implementation of your tax credit policy has resulted in a shambles. Now up to 1.7m family firms are uncertain of their tax liability. Can you not now, at last, admit that your policies are placing unbearable strain on the dedicated professionals of the Inland Revenue and Customs and Excise. Is it not time for real reform to simplify the tax system and for you to get your house in order?

Yours sincerely

Michael Howard

Links

• Exchange of letters between Mark Prisk, Shadow Financial Secretary to the Treasury and Dawn Primarolo, Paymaster General
• Am I affected? Free on-line tool