Wider powers given to Her Majesty’s Revenue & Customs (HMRC) to tackle tax avoidance and evasion are undermining British justice, according to a House of Lords report.
The Economic Affairs Committee said that HMRC has been granted disproportionately broad powers without effective safeguards being put in place, and it has demanded a review.
The Committee's chairman, Lord Forsyth of Drumlean, told the BBC: "HMRC is right to tackle tax evasion and aggressive tax avoidance. However, a careful balance must be struck between clamping down and treating taxpayers fairly. Our evidence has convinced us that this balance has tipped too far in favour of HMRC and against the fundamental protections every taxpayer should expect."
The Committee pointed to some “disturbing evidence” on HMRC’s approach to the loan charge, a new fee designed to combat what the taxman has described as “disguised remuneration” schemes. Under these schemes, workers are paid by way of a loan so that employers can avoid having to pay tax and National Insurance contributions (NICs) for them.
But there has been criticism of the fact that the charge can be applied retrospectively, which could hit people who may have been unaware they were at risk of falling foul of tax rules. As a result, the report recommends that HMRC should urgently review all loan charge cases where the only remaining consideration is the individual's ability to pay and establish a dedicated helpline to give those affected advice and support. The report said action should take place well in advance of the loan charge coming into effect in April 2019.
Meanwhile, HMRC is reportedly unhappy with the existing law on voluntary tax returns, which restricts its power to open enquiries and levy penalties. As a result, it intends to change the rules with retrospective effect, according to Accounting Web.
This means that HMRC will be able to use its full range of powers if a taxpayer submits a “purported return” – either a personal return, a trustee return, or a partnership return – if an individual is given no notice to file, and if HMRC decides to treat the return as if it had been made in response to a validly-issued notice.
Elsewhere the Taxpayers Alliance has complained that the UK tax burden is now at its highest in half a century, at 34.6% of gross domestic product (GDP), The Sun reported. The right-wing pressure group is calling on the government to set a new target to cut the figure to 29.9% of GDP by abolishing inheritance and capital gains taxes, air passenger duty and stamp duty. It has also recommended reducing income tax and halving NICs.
Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.
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Wider powers given to Her Majesty’s Revenue & Customs (HMRC) to tackle tax avoidance and evasion are undermining British justice, according to a House of Lords report.
The Economic Affairs Committee said that HMRC has been granted disproportionately broad powers without effective safeguards being put in place, and it has demanded a review.
The Committee's chairman, Lord Forsyth of Drumlean, told the BBC: "HMRC is right to tackle tax evasion and aggressive tax avoidance. However, a careful balance must be struck between clamping down and treating taxpayers fairly. Our evidence has convinced us that this balance has tipped too far in favour of HMRC and against the fundamental protections every taxpayer should expect."
The Committee pointed to some “disturbing evidence” on HMRC’s approach to the loan charge, a new fee designed to combat what the taxman has described as “disguised remuneration” schemes. Under these schemes, workers are paid by way of a loan so that employers can avoid having to pay tax and National Insurance contributions (NICs) for them.
But there has been criticism of the fact that the charge can be applied retrospectively, which could hit people who may have been unaware they were at risk of falling foul of tax rules. As a result, the report recommends that HMRC should urgently review all loan charge cases where the only remaining consideration is the individual's ability to pay and establish a dedicated helpline to give those affected advice and support. The report said action should take place well in advance of the loan charge coming into effect in April 2019.
Meanwhile, HMRC is reportedly unhappy with the existing law on voluntary tax returns, which restricts its power to open enquiries and levy penalties. As a result, it intends to change the rules with retrospective effect, according to Accounting Web.
This means that HMRC will be able to use its full range of powers if a taxpayer submits a “purported return” – either a personal return, a trustee return, or a partnership return – if an individual is given no notice to file, and if HMRC decides to treat the return as if it had been made in response to a validly-issued notice.
Elsewhere the Taxpayers Alliance has complained that the UK tax burden is now at its highest in half a century, at 34.6% of gross domestic product (GDP), The Sun reported. The right-wing pressure group is calling on the government to set a new target to cut the figure to 29.9% of GDP by abolishing inheritance and capital gains taxes, air passenger duty and stamp duty. It has also recommended reducing income tax and halving NICs.
Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.
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