Recent hearings of the Lords Select Committee looked at perceived abuse of HMRC’s tax collecting powers. The investigation is part of the Finance Bill Sub-Committee’s inquiry into the draft Finance Bill of 2018. Many of the tax experts who examined HMRC’s approach to tax collection presented evidence that the organisation had abused its powers.
The tax experts provided an opinion on whether HMRC had overstepped the mark when applying several controversial legislative measures, including Accelerated Payment Notices (APNs), the 2019 Loan Charge and Follower Notices.
The committee also asked for submissions on the topic and received more than 70 responses from stakeholders, accountants and tax institutions. Many expressed serious concerns about the Loan Charge and its potential impact on their livelihoods.
The committee was looking at HMRC’s powers due to a number of recent measures that many argue have removed taxpayer safeguards. One such controversial measure is APNs, which forces those believed to be involved in tax avoidance to pay the tax upfront or face steep penalties.
Another measure that concerns many is the retrospective powers that HMRC has. For example, it can go back as far as 12 years to investigate non-deliberate offshore non-compliance.
The 2019 Loan Charge has provoked the most reaction, as it permits HMRC to impose retrospective tax charges on money received through loan schemes going back as far as 1999. Many of these schemes were dubious, but nevertheless were within the letter of the law.
Head of Taxation at the Association of Chartered Certified Accountants Chas Roy-Chowdhury said: “We need a more holistic perspective on tax avoidance, rather than legislation granting HMRC further bolt-on powers each year without proper recourse. This has resulted in a great imbalance.”