Lords And The Low Incomes Tax Reform Say HMRC Has Too Much Power
Taxpayers Treated Unfairly by HMRC, Say Peers
The Low Incomes Tax Reform Group (LITRG) has welcomed a new report by the House of Lords’ Economic Affairs Committee on HMRC powers and taxpayer safeguards. The Powers of HMRC: Treating taxpayers fairly, concludes that the powers given to HMRC are ‘undermining the rule of law and access to justice in the current approach to tackling tax avoidance’.
Committee chair Lord Forsyth of Drumlean said: ‘HMRC is right to tackle tax evasion and aggressive tax avoidance. However, a careful balance must be struck between clamping down and treating taxpayers fairly. Our evidence has convinced us that this balance has tipped too far in favour of HMRC and against the fundamental protections every taxpayer should expect.
‘Since 2012, perhaps due to reduced resources, HMRC has been granted some broad, disproportionate powers without effective taxpayer safeguards. High penalties, designed to deter some taxpayers from continuing appeals against tax liabilities, are a tax on justice. Some of these powers disproportionately affect unrepresented and lower income taxpayers.’
The report recommends that HMRC review all loan charge cases when the only remaining consideration is the individual’s ability to pay. Further, penalties associated with the general anti-abuse rule (GAAR) and follower notices should be abolished.
It also urges the government to consider widening the role of the adjudicator, withdraw clauses 79 and 80 of the Finance Bill (which would extend HMRC time limits to assess offshore matters to 12 years), legislate to give the First-tier Tribunal the power to conduct judicial reviews, and assess whether HMRC is adequately resourced to fulfil its charter obligations in the next spending review.
Head of LITRG team Victoria Todd said: ‘HMRC needs powers to administer and enforce the tax system effectively – but those powers need to be proportionate and accompanied by accessible safeguards.’