HMRC is to be put under greater scrutiny, with a new professional standards committee to oversee its use of wide-ranging powers to tackle tax avoidance and evasion
The move for greater scrutiny of HMRC comes amid concerns that the balance between clamping down and treating taxpayers fairly has tipped too far in its favour.
The committee, which will take advice from a range of independent experts, will consider, among other things, issues relating to the implementation of HMRC powers.
It will not consider individual cases or government tax policies. HMRC will publish details of the committee’s membership and terms of reference in the autumn.
The plans are part of a package of measures revealed in a written statement on HMRC powers and taxpayer safeguards made by Jesse Norman, financial secretary to the Treasury, to the House of Commons. He outlined what he described as ‘several actions HMRC are taking to maintain and develop public trust in their operations’.
Norman said: ‘In some areas, particularly where HMRC are faced with fraud, evasion and complex avoidance, those powers are necessarily far-reaching. It is therefore of great public importance that they are exercised in a way that maintains public trust, with appropriate oversight and operational checks and balances, and statutory safeguards that enable taxpayers to dispute HMRC’s decisions or complain about their treatment.’
Norman was responding to a report published by the House of Lords economic affairs committee at the end of last year. This claimed that ‘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.’
The committee voiced particular concerns about the application of the loan charge on outstanding loans from disguised remuneration schemes and plans for extending HMRC’s time limits for assessing offshore matters to 12 years.
Neither of these issues is addressed directly in Norman’s statement. However, he revealed he has asked HMRC ‘to evaluate the implementation of powers introduced since 2012 in relation to the powers and safeguards principles, engaging with stakeholders, including taxpayers and their representatives’.
This will be published in early 2020. HMRC is also required to undertake a comprehensive review of the findings identified in the 2019 adjudicator’s report and will publish the results of the review by the end of this year.
Norman also outlined plans for HMRC to increase the transparency of its operations.
‘This year, as a first step towards that commitment, HMRC will expand the range of performance and management information they publish in their monthly and quarterly performance publications.
‘Previous reporting focused on specific aspects of their telephony and post processes, for instance, call waiting and post turnaround times, as well as compliance yield figures.
‘From August HMRC will publish further information, including but not limited to, their debt management, registrations and repayment services,’ he said.
HMRC is also set to report on the effectiveness of the work of its extra support service for vulnerable taxpayers, and to review taxpayers’ experiences during compliance enquiries.
CIOT said it welcomed the measures, and was optimistic these will lead to stronger safeguards against misuse of HMRC powers and strengthen public trust in the tax authority.
Glyn Fullelove, CIOT president, said: ‘The proposed professional standards committee is by its nature a compromise – a consultative rather than supervisory body, not independent of HMRC but advised by independent experts.
‘It will no doubt disappoint some but we prefer to see it as a positive step which has the potential to play a useful role in maintaining public confidence in HMRC’s use of their extensive powers.’
Pat Sweet | 24-07-2019