House of Lords call for evidence on extent of HMRC powers

The House of Lords has issued a two-week call for evidence into the extension of HMRC powers as part of government plans for Making Tax Digital set out in the draft Finance Bill 2018

In scrutinising the draft Bill, the Economic Affairs Finance Bill Sub-Committee will examine developments in the balance of powers and safeguards between HMRC and the taxpayer.

It will also examine progress on the Making Tax Digital programme and HMRC progress with plans since the Sub-Committee’s March 2017 report on Making Tax Digital for Business, which followed a heated series of committee sessions.

The Economic Affairs Finance Bill Sub-Committee invites written contributions for its inquiry on the draft Finance Bill 2018 by 1 October.

Lord Forsyth of Drumlean, chairman of the Sub-Committee, said: ‘HMRC’s powers to tackle tax avoidance and tax evasion have expanded exponentially in recent years. The Sub-Committee will investigate the practical impact of these new powers on the taxpayer.

‘We will also consider whether Making Tax Digital for VAT is on track for introduction in April 2019, and whether sufficient support for businesses will be in place in time.’

HMRC powers

The Sub-Committee will be looking whether there is sufficient oversight of HMRC powers and whether there is a balance between the extent of their powers as the tax authority and the individual taxpayer, as well as the day-to-day function of HMRC powers and whether they are inappropriate or unfair. It is also examining how HMRC powers should be differentiated to reflect the different problems being tackled, ie, taking a more measured approach to different issues depending on their level of tax abuse, eg, careless error, sophisticated tax avoidance and deliberate tax evasion.

It is also keen to get feedback on whether HMRC’s powers are  being used in line with their original policy intent. On specific measures, it questions whether there is the right balance of powers and safeguards in the security deposit regime and the assessment of offshore matters, as per the amendments  proposed in clauses 33–35 of the Finance Bill.

Making Tax Digital for VAT

Following a heated series of evidence sessions in 2017 and the subsequent MTD report, the committee wants feedback on the key improvements that have occurred, or new concerns which have arisen, focusing on HMRC's readiness for Making Tax Digital for VAT and whether it has made any progress on the rollout timetable for the wider Making Tax Digital reporting. It will also review the preparedness of HMRC, businesses (small and large) and software providers for the implementation of Making Tax Digital for VAT in April 2019, and what are the challenges of concurrent preparations for Brexit?

It is also keen to see clearer costings of Making Tax Digital for VAT for businesses, an area where estimates have varied from the low £100s to thousands of pounds.

‘We want to hear from a wide range of people and organisations, in particular those who may have experienced the use of HMRC's powers or be preparing for Making Tax Digital, and we are looking for sensible, pragmatic recommendations on how the current approach to these issues could be improved,’ said Lord Forsyth.

House of Lords select committee: Call for evidence on HMRC powers and Making Tax Digital issued 12 September 2018

Written submissions should be submitted by 1 October to the Economic Affairs Finance Bill Sub-Committee here

Report by Sara White

Average: 5 (1 vote)