The Government must keep working to tackle tax avoidance promoters, says Lords committee report

Today the House of Lords Economic Affairs Finance Bill Sub-Committee has published its report on the Government’s draft Finance Bill 2021, New powers for HMRC: fair and proportionate?

The report focuses on key areas of the Bill expanding the powers of HMRC:

• The Committee is concerned that new HMRC powers are disproportionate, poorly targeted and without safeguards. The Committee also calls for HMRC to make better use of its existing powers before seeking new legislation.
• The Government must redouble efforts to prevent the proliferation of new tax avoidance schemes. The Committee welcomes the proposals for getting tough, but calls for it to keep its focus on the promoters of these schemes. It also highlights the particular vulnerability of lower income taxpayers to these schemes and their continued use by some employment intermediaries.
• The Committee objects to the Government’s proposals for changes to HMRC's civil information powers. It is very concerned about the removal of taxpayer safeguards for information requests, particularly the need to request permission from the tax tribunal. These proposals are flawed and not supported by evidence. The tribunal approval requirement should remain and HMRC should find a different way to streamline information requests.
• The Committee is worried about 'mission creep' in the proposals for new tax checks for licence renewal applications. These checks may go beyond a simple check for tax registration, which was thought to be the original intention. These proposals could result in more traders becoming unlicensed, potentially posing a risk to the public.

Lord Bridges of Headley, Chair of the Economic Affairs Finance Bill Sub-Committee, said:

“The Government is absolutely right to get tough on the promoters of tax avoidance schemes, particularly as they continue to market these schemes to low income taxpayers.

“The Committee is, however, worried about the removal of important taxpayer safeguards such as the need for HMRC information requests to be approved by a tax tribunal. New powers must be proportionate, properly targeted and with adequate safeguards.”