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Retrospective Taxation
A discussion paper by the Chartered Institute of Taxation
1. Introduction and summary
1.1.
This paper sets out the views of the Chartered Institute of Taxation (CIOT) on retrospective legislation, a topic that has always been of concern to the CIOT. However, we think it warrants particular consideration in the context of the 'Tax Policy Making:a new approach' paper published with the Emergency Budget in June 2010....
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1.4. Under the principle of Parliamentary sovereignty, the Government in the UK can legislate retrospectively. It is in some respects constrained by its obligations under the European Convention of Human Rights and EU law.
We accept that retrospective legislation is not prohibited by these obligations, provided the balance between the rights of individual taxpayers and the general public interest is maintained. However, the use of retrospective legislation will always damage the key principle of certainty in the UK tax system to some extent.
1.5.
We do not say there is never a case for retrospection - indeed at times we will argue for it to correct an obvious anomaly that is harming taxpayers, such as with the recent changes to capital distributions treatment. However, it is something that should be used with extreme care and justified at length..."
http://www.tax.org.uk/Resources/CIOT/Documents/2010/11/Retrospective%20taxation%20and%20tax%20policy%20making%20CIOT%20Nov10.pdf