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HMRC has launched a consultation Tackling the hidden economy: Extension of data-gathering powers. The government intends to extend HMRC’s powers to gather data from third parties. These would directly affect businesses that act as intermediaries or provide electronic payment services.
HMRC has launched a consultation Tackling the hidden economy: Extension of data-gathering powers. The government intends to extend HMRC’s powers to gather data from third parties. These would directly affect businesses that act as intermediaries or provide electronic payment services.
Finance Act 2013, s 228 has given HMRC powers to collect data from merchant acquirers – businesses that process credit and debit card transactions. This is used to identify traders that are receiving income but are not registered for tax, as well as those who are registered but underdeclare their income to HMRC.
The new legislation would extend these powers to data held by:
- Electronic payment providers – businesses that perform a similar function to merchant acquirers by handling monetary transactions, but not necessarily in relation to credit and debit cards.
- Business intermediaries – these can take many forms, for example allowing customers to make orders, purchases or reservations, relating to goods, services or digital content. They typically operate on digital platforms.
The consultation looks at the scope of these changes, the best approach to delivering them in legislation, and how to minimise the compliance costs for businesses.
HMRC does not intend to use the data to examine the volume of payments made by individuals, to examine amounts that people have received not through their business activity (for example electronic transfers of money between friends), or the nature of transactions conducted by individuals.
Describing this as “the latest in a long line of aggressive moves by HMRC to boost tax intake”, Roy Maugham, tax partner at UHY Hacker Young, said: “The new powers HMRC are seeking indicate that they believe there is large-scale tax evasion in the ‘app economy’. The proposals could allow HMRC easier access to data from a variety of online marketplaces including Gumtree, craigslist and Airbnb.”
Comments should be emailed to consultation.extensionofdata-gatheringpowers@hmrc.gsi.gov.uk by 14 October 2015.
