§ The Paymaster General (Dawn Primarolo)On 8 September 2003, I announced legislation for Finance Bill 2004 to ensure that, for Inland Revenue taxation matters, the usual six year time limits apply to common law actions for relief from the consequences of a mistake of law as apply for other actions to recover direct tax. The change applies to court actions brought on or after 8 September 2003. The intended effect is to restore balance to the tax system so that broadly similar time limits apply to assessments and repayments. Draft clauses for inclusion in Finance Bill 2004 were published at the time of the announcement.
Some claimants who had commenced proceedings before 8 September 2003 are seeking to amend their claims to add in years beyond the normal time limits. They are doing so because, under existing law, if the courts allow an amendment of this sort, it is deemed to be a new action started on the date of the original action. So it is arguable that the legislation announced on 8 September would not apply to such an amendment. And, other claimants may also seek to amend their existing claims to add in years beyond the normal time limits.
This places tax revenues at risk. And whilst the Inland Revenue may well succeed in opposing amendments to existing claims in the courts, I believe that this risk is unacceptable.
I am therefore announcing today amended draft legislation to ensure that tax revenues are further protected. The amended draft legislation will prevent amendments being made to proceedings for relief from the consequences of a mistake of law, commenced before 8 September, to introduce new periods of claim for years beyond the normal time limits. The change announced today will not, however, affect applications made to the court before today.
This draft clause is applicable to England, Wales and Northern Ireland. The draft legislation applying to Scotland is unchanged. This is because the new issue that has arisen is not relevant in Scotland.
Today's Inland Revenue News Release giving the relevant background to this measure and the amended draft clause for inclusion in Finance Bill 2004 have been deposited in the Library of the House and are also accessible on the Inland Revenue's website http://www.inlandrevenue. gov. uk/.