The House of Lords has criticised the conditions of the HMRC’s latest bill which could see the removal of taxpayer safeguards for information requests, with members of the committee labelling the proposals as “flawed and not supported by evidence”.
According to the House of Lords, new legislation under the 2021 finance bill will see the HMRC be allowed to issue Financial Institution Notice’s (FIN). These notices will be able to force financial institutions to provide information to HMRC when asked about a specific taxpayer, “without the need for approval from the independent tribunal that considers tax matters”.
These measures will mainly affect financial institutions, such as banks and building societies, who might be asked for information for the purposes of checking the tax position of a taxpayer.
The committee has said it is “very concerned” about the removal of these tax protection efforts, and has called for the approval requirement to remain and for HMRC to “undertake a full review of the information request process to find alternative ways in which it could be streamlined”.
If approved by parliament this legislation will come into effect in 2021.
Lord Bridges of Headley, chair of the 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.”