The powers of HM Revenue and Customs to delve into the affairs of UK taxpayers are to be investigated by a special parliamentary committee.
The House of Lords Economic Affairs Finance Bill Sub-Committee will investigate developments in the balance of powers and safeguards between HMRC and the taxpayer.
The committee said on Wednesday it was adding the inquiry to its scrutiny of the draft Finance Bill 2018.
Human Rights Focus
Committee chair Lord Forsyth of Drumlean, said: “HMRC’s powers to tackle tax avoidance and tax evasion have expanded exponentially in recent years. The Sub-Committee will investigate the practical impact of these new powers on the taxpayer.
“We want to hear from a wide range of people and organisations, in particular those who may have experienced the use of HMRC’s powers or be preparing for Making Tax Digital, and we are looking for sensible, pragmatic recommendations on how the current approach to these issues could be improved.”
It has been questioned whether HMRC’s powers breach human rights.
Key powers not abused
Rosalind Burns, partner at Hamilton Rose Tax, told International Adviser: “It is important for HMRC to be able to access any information they require in order to confirm a taxpayer’s position where they consider that discrepancies may have arisen and where the taxpayer is being obtrusive.
“It is imperative, however, that HMRC do not abuse these powers in situations where there is no suspicion of fraud and/or the taxpayer is co-operating.
“The review of HMRC powers should consider how easy the current legislation makes it for HMRC to justify a “fishing exercise” into a taxpayer’s position and should certainly look at whether increasing their powers to obtain third party information without the taxpayer’s knowledge can really be justified in most situations.”
Overdue check
David Redfern, Director, DSR Tax Claims, told IA: “The House of Lords inquiry is long overdue considering the slow creep of HMRC’s powers to access the financial data and bank accounts of taxpayers.
“While it is right and proper that HMRC are able to tackle tax avoidance and evasion efficiently, there needs to be adequate safeguarding in place to ensure that the civil liberties of taxpayers are not eroded by the extension of HMRC’s powers. That the inquiry will be considering this is a welcome development.”
The inquiry will cover:
- What principles should underlie the design of HMRC powers, and where should the balance be struck between taxpayer and tax authority?
- What principles should govern the development of HMRC powers in a globalised digital information age?
- To what extent, or in what areas, is the existing balance of powers between HMRC and the taxpayer inappropriate or unfair?
- How should HMRC powers be differentiated to reflect the different problems being tackled e.g. careless error, sophisticated tax avoidance, and deliberate tax evasion?
- How are HMRC’s powers operating in practice? Are they being used in line with their original policy intent?
- Is there sufficient oversight of HMRC powers, and safeguards against their abuse or misuse? Does the oversight and governance of the powers need to be improved? If so, how?
- What is the right balance of powers and safeguards in the security deposit regime and the assessment of offshore matters, for which amendments are proposed in clauses 33–35 of the draft Finance Bill?
The Sub-Committee will also follow up on its 2017 report on HMRC’s Making Tax Digital for Business programme.
The deadline for the submission of written evidence is 1 October 2018.
