Tax enquiries – consultation on closure rules
LITRG has responded to a HMRC consultation on proposed changes to the closure rules for tax enquiries. These changes are aimed at closing aspects of enquiries which have been ongoing over a long period of time and where there is tax avoidance or significant amounts of tax at stake or where there are complex issues which could have a wider impact.
We agree that the current rules need to be revisited as tax legislation has become more complicated since the introduction of the self assessment rules. However, we consider the current proposals to be very one-sided favouring HM Revenue & Customs (HMRC), potentially enabling HMRC to choose specific areas of an open enquiry to take to Tribunal whereas the taxpayer has no similar rights or powers. We would prefer to see a more balanced approach where both parties have the power to refer to the Tribunal to seek partial closure of certain aspects.
We think there are insignificant safeguards to protect vulnerable groups and low-income taxpayers, we recommend that a de minimis limit on the potential tax at stake is used and that the use of these new powers are monitored.
The LITRG response can be found here.