The Economic Affairs Committee of the House of Lords has published a report, The Powers of HMRC: Treating Taxpayers Fairly, examining the development of HMRC's powers to collect tax.
Commenting on this, Mishcon de Reya Tax Litigation Partner Paul Noble said:
"This report, which will be welcomed by many, finds that the powers granted to HMRC to deal with tax avoidance and evasion have been slanted very much in HMRC’s favour, thus “undermining access to justice”.
"There have been many new powers granted to HMRC in recent years as it seeks to tackle non-compliance and evasion, including Accelerated Payment Notices (APNs), a new loan charge in 2019 and increased assessment powers for offshore non-compliance. The report concluded that the balance has now been tipped too far in HMRC’s favour. Whilst tax avoidance and evasion need to be dealt with, the powers and their application need to be proportionate.
"The report also addresses the particularly controversial fact that there is no ability to appeal against the issue of APNs or Follower Notices, only the possibility of an internal reconsideration by HMRC. Currently, this leaves many businesses and individuals exposed to a lack of independent scrutiny for decisions taken by HMRC. The report noted that the principles underpinning HMRC's powers are being forgotten in a bid to tackle avoidance and evasion with fewer HMRC resources, which have rendered it unable to effectively perform its dual role of tackling avoidance and evasion and ensuring taxpayers are treated fairly. These are frustrations we continue to hear from clients, many of whom would welcome a more balanced approach from HMRC."
"Independent scrutiny of the application of powers is vitally important if we are to retain the integrity of the tax system. A recurring theme throughout the report is the need for HMRC to be held to a higher standard of accountability."