In a landmark 2005 House of Lords case (commonly referred to as the Wilkinson case), the UK courts considered a significant number of Extra Statutory Concessions (ESCs) published by HMRC. The decision by the House of Lords questioned the ability of HMRC to make use of certain administrative discretions (such as an ESC).

An ESC is a concession granted by HMRC that usually reduces a taxpayer's tax liability to a level less than they would usually pay based on a strict reading of the law. The majority of the ESCs introduced by HMRC deal with anomalies in the legislation which under certain specific situations create unintended consequences for taxpayers and which are difficult to remedy from a legislative effect.

HMRC has published a new version of the notice entitled VAT Notice 48: Extra Statutory Concessions that details the ESCs relating to indirect taxes that currently remain in place. Two ESCs became obsolete from 1 January 2021 and have been withdrawn.

The number of ESCs still in use has considerably reduced over the years with many of them becoming obsolete. In addition, HMRC has drafted a significant number of ESCs into law.

Source: New feed