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Published on 26 September 2018

Increasing HMRC’s civil information powers

LITRG has responded to the Government’s consultation on increasing HMRC’s civil information powers. The consultation focuses on the procedures around issuing third party notices, which currently require approval from either the taxpayer or an independent tribunal. HMRC are concerned that obtaining approval from a tribunal can add a great deal of time to the information gathering process and ultimately prolongs both domestic enquiries and the time taken to exchange information internationally.

Gold statue holding two scales.

In order to address these issues, HMRC are proposing to abolish the requirement to obtain tribunal approval. However, LITRG has rejected the Government’s case to do so, stating that the existing safeguards are just as valid today as when they were originally introduced, regardless of HMRC’s claim that they are currently unable to process third-party notices efficiently.

Further proposals in the consultation include:

  • Widening the purpose for which information can be required, so that HMRC would be allowed to access “information that was reasonably required for all its tax functions, including the collection of tax debt”.
  • Extending the scope of the daily penalties for failure to comply with a notice requiring information relating to an unknown taxpayer to cover all information notices in Schedule 36, Finance Act 2008.
  • Introducing an obligation on third parties to not inform the taxpayer of a notice where the Tribunal has approved this.   

LITRG has stated that it feels expanding HMRC’s debt collection powers by using Schedule 36 is likely to have a negative impact on low-income taxpayers – suggesting instead that HMRC take a more collaborative approach rather than threatening with £1,000-a-day penalties those without the means to pay.

The LITRG response can be found here: Amending HMRC’s Civil Information Powers – LITRG response

Tom Henderson

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