Press Release: Lords’ concerns about HMRC backed by LITRG
The Low Incomes Tax Reform Group (LITRG) welcomes the publication of a major new report by the House of Lords Economic Affairs Committee on HMRC powers and taxpayer safeguards, which supports a number of recommendations made by the group in written and oral evidence to the Committee.
On offshore time limits, the report states that the new powers that double or even triple existing time limits are “unreasonably onerous and disproportionate to the risk” - and recommends that they are withdrawn entirely. LITRG has raised a number of serious concerns about the proposals, highlighting that vulnerable groups such as the elderly and migrants were likely to be disproportionately affected, not just the wealthy with complex offshore tax affairs.
In response to the Government’s proposals on HMRC’s civil information powers, the report concludes that HMRC have “not offered a convincing rationale” for removing the requirement to obtain tribunal approval before issuing a statutory information request to third parties. The Government claims that obtaining approval from a tribunal can mean domestic enquiries take too long, but LITRG reject this, stating that the existing safeguards are just as valid today as when originally introduced.
Head of LITRG Team Victoria Todd said of the report:
“We are pleased that the House of Lords have listened carefully to the evidence provided by LITRG and other organisations in respect of the recent proposals by the Government. HMRC obviously need powers to administer and enforce the tax system effectively – but those powers need to be proportionate and accompanied by accessible safeguards.
“On offshore time limits, our evidence showed how low-income taxpayers with small amounts of bank interest or foreign pensions are likely to be affected. Threatening or distressing letters from HMRC demanding tax which is up to 12 years old is not the right approach for these taxpayers who have not acted deliberately; instead HMRC should focus on educating taxpayers and ensure its compliance efforts are better targeted.
“We are pleased that the House of Lords have agreed with LITRG on the importance of taxpayer safeguards in the matter of third-party information notices. The requirement for HMRC to obtain tribunal approval is vital to prevent HMRC becoming judge and jury in a matter of their own interest.
“LITRG has been concerned for many years that the judicial review process, needed to challenge decisions by HMRC involving discretion, is not accessible to most unrepresented taxpayers mainly due to cost and complexity. We have previously recommended that such powers should be given to the First-tier Tax Tribunal in order to make the process more accessible – we are therefore pleased to see this recommendation in the Committee’s report.”