FB2016: wider data gathering powers for HMRC to target online avoidance

The government is expecting to bring in an additional £860m over the next five years by targeting the hidden economy and extending HMRC’s data gathering powers to include online and electronic payment providers who operate digital wallets in a bid to ‘future proof’ its information gathering approach

HMRC says businesses are increasingly using intermediaries to provide custom or take payments without registering for tax, and payment models have evolved and are moving away from cash and card transactions to other electronic payment routes, which means some businesses can trade digitally while remaining beyond HMRC’s view.

Legislation included in Finance Bill 2016 will give HMRC a new power to gather data from business intermediaries who facilitate transactions, particularly online, and electronic payment providers who operate digital wallets. HMRC will then be able to compare that third party data with its own information to identify those businesses who are failing to register with HMRC or are not declaring the full amount of the tax they owe.

Secondary legislation made under paragraph 1(3) of Schedule 23 will specify the relevant data that HMRC can require electronic payment service providers and business intermediaries to provide. This will be information in relation to data relating to electronic payments they facilitate to recipient accounts and include identification of the account holder’s name, address, telephone number, email address, website address, national insurance number, VAT number, unique taxpayer reference, or any other identifying information, if available, bank account details and whether an individual, partnership or limited company.

HMRC will have the power to require data from business intermediaries revealing the gross value of the transactions they facilitated, whether or not the payment for the transaction facilitated was processed by the data holder. HMRC will also be able to identify the trade of the business as part of the arrangement between the intermediary and the business.

Where transactional data is not held, HMRC will be able to require any information that will enable HMRC to either quantify or establish the volume/level of transactions of the business, such as commissions and commission rates charged, number of transaction reviews, number of click through rates and number of visits to an advert.

Data-holders will have the right of appeal to notices issued which already applies to other types of data-holder.

HMRC has already held a consultation on the general principles behind the proposals. There is now a technical consultation on the draft legislation which will close on 3 February 2016.

Details are here

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Pat Sweet |Reporter, Accountancy Daily [2010-2021]

Pat Sweet was the former online reporter at Accountancy Daily and contributor to the monthly Accountancy magazine, pub...

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