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Professional bodies in the tax sector have raised concerns with Parliament over the new powers granted to HMRC by Finance Bill (No.3) 2010-11.
In their contributions to the latest report from the Treasury select committee of MPs, the Chartered Institute of Taxation (CIOT) and the ICAEW Tax Faculty express about clauses 85 to 87 of the Bill.
Under the clauses, the Revenue is imbued with additional data-gathering privileges, and is enabled to implement the EU directive covering mutual assistance for the recovery of taxes.
The taxman is also given the power to make secondary legislation to require security from a taxpayer to cover PAYE deductions – a power that the Tax Faculty believes lacks sufficient safeguards in the primary legislation (clause 85) and ‘could be used against business[es] which cannot pay, rather than those who won’t pay’.
Given the legislation would create a criminal offence punishable by a fine, the Tax Faculty recommends that a request for a security can be made only by an HMRC commissioner. The body goes on to insist the Revenue’s new capacity for gathering data from third parties (covered in clause 86) should be ‘reasonable and proportionate, not impose undue costs’ and grant data holders with full rights of appeal.
The expanded powers could impose administrative burdens upon businesses and individuals, claims the CIOT, which repeats its oft-expressed call for a ‘proper balance of safeguards’ for taxpayers.
In the Treasury committee’s report scrutinising the tax aspects of the Finance Bill, the institute questions clause 87, expressing concern about whether or not employment of the EU’s mutual assistance recovery directive (MARD) will require adequate buffers around the security of data sent to overseas tax authorities.
‘The MARD procedures seem to be skewed in favour of the foreign tax jurisdiction and lack help for those seeking to recover overpayments from overseas,’ adds the CIOT in the report, which examines the tax-based sections of the Finance Bill against six principles outlined in a Treasury document published earlier this year: fairness, support of growth, certainty, stability, practicality and coherence.
