The Low Incomes Tax Reform Group (LITRG) welcomes the publication of a major new report by the House of Lords Economic Affairs Committee on HMRC powers and taxpayer safeguards, which supports a number of recommendations made by the group in written and oral evidence to the Committee.
On offshore time limits, the report states that the new powers that double or even triple existing time limits are “unreasonably onerous and disproportionate to the risk” - and recommends that they are withdrawn entirely. LITRG has raised a number of serious concerns about the proposals, highlighting that vulnerable groups such as the elderly and migrants were likely to be disproportionately affected, not just the wealthy with complex offshore tax affairs.
In response to the Government’s proposals on HMRC’s civil information powers, the report concludes that HMRC have “not offered a convincing rationale” for removing the requirement to obtain tribunal approval before issuing a statutory information request to third parties. The Government claims that obtaining approval from a tribunal can mean domestic enquiries take too long, but LITRG rejected this, stating that the existing safeguards are just as valid today as when originally introduced.
Head of LITRG Team Victoria Todd said of the report:
“We are pleased that the House of Lords have listened carefully to the evidence provided by LITRG and other organisations in respect of the recent proposals by the Government. HMRC obviously need powers to administer and enforce the tax system effectively – but those powers need to be proportionate and accompanied by accessible safeguards.
“On offshore time limits, our evidence showed how low-income taxpayers with small amounts of bank interest or foreign pensions are likely to be affected. Threatening or distressing letters from HMRC demanding tax which is up to 12 years old is not the right approach for these taxpayers who have not acted deliberately; instead HMRC should focus on educating taxpayers and ensure its compliance efforts are better targeted.
“We are pleased that the House of Lords have agreed with LITRG on the importance of taxpayer safeguards in the matter of third-party information notices. The requirement for HMRC to obtain tribunal approval is vital to prevent HMRC becoming judge and jury in a matter of their own interest.
“LITRG has been concerned for many years that the judicial review process, needed to challenge decisions by HMRC involving discretion, is not accessible to most unrepresented taxpayers mainly due to cost and complexity. We have previously recommended that such powers should be given to the First-tier Tax Tribunal in order to make the process more accessible – we are therefore pleased to see this recommendation in the Committee’s report.”
Notes for editors
1 Low Incomes Tax Reform Group
The LITRG is an initiative of the Chartered Institute of Taxation (CIOT) to give a voice to the unrepresented. Since 1998 LITRG has been working to improve the policy and processes of the tax, tax credits and associated welfare systems for the benefit of those on low incomes.
The CIOT is the leading professional body in the United Kingdom concerned solely with taxation. The CIOT is an educational charity, promoting education and study of the administration and practice of taxation. One of our key aims is to work for a better, more efficient, tax system for all affected by it – taxpayers, their advisers and the authorities. The CIOT’s work covers all aspects of taxation, including direct and indirect taxes and duties. The CIOT’s 18,000 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’, to represent the leading tax qualification.
Contact: Hamant Verma, External Relations Officer, 0207 340 2702 HVerma@ciot.org.uk
Out of hours contact: George Crozier, 07740 477 374)