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HMRC powers to tackle tax avoidance and evasion undermine rule of law

Taxpayers are not being treated fairly a House of Lords committee has concluded.   HMRC Powers: Treating Taxpayers Fairly says that recent powers provided to HMRC undermine the rule of law and hinder taxpayers' access to justice.  The Economic Affairs Committee calls for the oversight of HMRC and its powers to be reviewed.

tax.jpgHMRC is being asked to collect more tax with fewer, less experienced staff.  These declining resources have left it unable to perform its twin roles of tackling avoidance and evasion, and ensuring taxpayers are treated fairly.  The report argues that pressure to improve its counter-avoidance and evasion performance could explain its neglect of its other responsibilities.

One result of this pressure came in the form of a hurried consultation in summer 2018.  HMRC set out plans to allow it access to certain information from third parties - such as building societies - without first seeking the agreement of the taxpayer or the tax tribunal (as required at present), with no right of appeal. It also proposed that it should be able to use the information acquired for its wider purposes such as debt collection or tracing hidden assets.  

The BSA and other stakeholders pushed back hard on these proposals, and now the Economic Affairs committee has done the same.  The report says that oversight by the tax tribunal is an important taxpayer safeguard, which should not be removed without good reason. It also warns that as reliance on third parties grows, any weaknesses in their systems and processes may have implications for data accuracy.

Where HMRC goes from here is unclear.  The signs are not encouraging.   Without an increase in resources and a change in culture, treating taxpayers fairly may be a thing of the past with HMRC.

Posted by Andrea Jeffries on 19 December 2018