The UK government must ‘redouble’ its efforts to prevent the proliferation of new tax avoidance schemes, according to the UK’s House of Lords Economic Affairs finance Bill Sub-Committee’s report on the Government’s draft Finance Bill 2021, New powers for HMRC: fair and proportionate?
The report focused on key areas of the Bill expanding the powers of HMRC:
- The Committee expressed concern that new HMRC powers are disproportionate, poorly targeted and without safeguards. The Committee also called for HMRC to make better use of its existing powers before seeking new legislation.
- The Government must redouble efforts to prevent the proliferation of new tax avoidance schemes. The Committee welcomed the proposals for getting tough, but called for it to keep its focus on the promoters of these schemes. It also highlighted the vulnerability of lower income taxpayers to these schemes and their continued use by some employment intermediaries.
- The Committee objected to the Government’s proposals for changes to HMRC’s civil information powers. The Committee was very concerned about the removal of taxpayer safeguards for information requests, particularly the need to request permission from the tax tribunal.
- The Committee expressed concern about ‘mission creep’ in the proposals for new tax checks for licence renewal applications. It said that these checks may go beyond a simple check for tax registration, which was thought to be the original intention, and that the proposals could result in more traders becoming unlicensed, potentially posing a risk to the public.
Economic Affairs Finance Bill Sub-Committee chair George Bridges said: “The Government is absolutely right to get tough on the promoters of tax avoidance schemes, particularly as they continue to market these schemes to low income taxpayers.
“The Committee is, however, worried about the removal of important taxpayer safeguards such as the need for HMRC information requests to be approved by a tax tribunal. New powers must be proportionate, properly targeted and with adequate safeguards.”