Increased prison terms for tax fraud, the merged R&D tax relief scheme and wider HMRC data collection powers to be examined by Lords Finance Bill Sub-Committee
Lord Leigh of Hurley, chair of the Finance Bill Sub-Committee, said: ‘In its draft Finance Bill, the government is proposing tougher consequences on promoters of tax avoidance and people convicted of tax fraud. It proposes a potential merged R&D scheme and additional tax reliefs for R&D intensive SMEs, as well as a measure which increases the data requirements from certain taxpayers to HMRC.
‘These are important changes. To inform our work we want to hear from as broad a range of people and organisations as possible. If you have a view on any aspect of these proposals, please let us know what you think.’
The sub-committee will focus on the following measures included in the draft Finance Bill 2023-24:
- dealing with promoters of tax avoidance and increasing the maximum prison term for tax fraud;
- reforms providing for the merger of the two existing schemes providing tax relief for Research and Development (R&D) expenditure and reliefs for R&D-intensive small and medium enterprises (SMEs);
- a measure changing the data that certain taxpayers are required to provide to HMRC.
On the strengthening of sentences for tax avoidance promoters, the Lords are keen to find out whether there are sufficient safeguards in place and appropriate governance around the criminal offence and disqualification measures, as well as questioning whether HMRC has adequate resources to proceed with prosecutions and whether existing powers for HMRC should be extended. It is also asking for information on the prevalence of directors fronting up companies in return for payment.
On the plan to merge the current R&D schemes for large business and SMEs into a single system, it is focusing on the benefits, how easy it will be for smaller companies to adjust to the scheme and whether the timetable for introduction in 2024 gives adequate time to prepare for the changes. Another area of concern is the cost of compliance with the new rules.
The Lords also want to gauge people’s reaction to plans for HMRC to collect more data about businesses, including a breakdown of job titles in businesses, the hours worked by employees and the amount of dividends paid to shareholders.
The deadline for the submission of written evidence is Friday 6 October 2023.