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HMRC seeks to collect data on taxpayers without independent oversight, Pinsent Masons warns

12/07/2018 News Team

HM Revenue & Customs (HMRC) is seeking new powers that will allow it to demand information on taxpayers from any business or organisation without independent oversight, international law firm Pinsent Masons has noted.

Pinsent Masons said the proposals outlined in a released consultation mean HMRC would no longer have to gain approval from the tax tribunal before submitting information requests to third parties.

A third party such as financial institutions, accountants, lawyers or estate agents receiving the notice would be able to appeal it to the tribunal only on the basis that complying with it would be very difficult.

As an alternative, the introduction of a new ‘financial institution’ request solely for banking information; such as bank statements and full transaction histories would not require tribunal approval.

Additionally, an extension of what type of information can be requested, including information that would enable HMRC to seize assets or make a taxpayer insolvent.

Jason Collins, a partner at Pinsent Masons, said: “If anyone was alarmed at HMRC’s reach then these new powers will feed their concerns. HMRC is essentially asking for unfettered access to information on taxpayers from third parties with no advance independent oversight.

“Obtaining prior consent from the tribunal is an essential check and helps safeguard taxpayers against fishing expeditions.

"As the taxpayer may not even know about the information request, removing advance approval of the notice by the tribunal does not adequately safeguard the taxpayer. The fact that the third party can appeal the notice if complying with it is too onerous does not help the taxpayer. The third party is likely to be more concerned about the logistics of complying with the notice than protecting the taxpayer from an HMRC fishing expedition."

He continued: “It may be logical to have a separate information request for banks covering basic bank account information given the likelihood that these requests will be more routine, especially now that overseas tax authorities will be automatically receiving data on taxpayers’ UK accounts through the Common Reporting Standard.

"However, information requests to other types of third party should remain subject to approval by the tribunal as they are likely to be rarer and will probably involve less routine information. Oversight by the tribunal will be more important in these cases to ensure that HMRC is not overstepping the mark.

“Although HMRC references the fact that only one information request has been turned down by tribunals so far, it is likely that in a number of cases tribunal judges will have trimmed down requests which went back too many years or were too wide.”

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