House of Lords slam powers given to HMRC to battle tax avoidance

Powers granted to HM Revenue & Customs (HMRC) to combat tax avoidance have been have been deemed to risk undermining the rule of law and access to justice, a House of Lords report has concluded.

The House of Lords Economic Affairs Committee has called for a review of the revenue’s powers, which have gradually increased in recent years.

The committee’s chair Lord Forsyth said the government’s approach to tax controls was “devastating the lives of middle and lower income individuals” who had used disguised remuneration schemes, with many of them being “required to do so” by their employers.

Schemes such as this one typically involve using a loan or third-party payment to avoid income tax and National Insurance contributions, but will be subject to an incoming loan charge from April 2019.

However, the committee argued that two sections on tax avoidance from the government’s finance bill would “introduce disproportionate power”. The sections being referred to would increase the time limits for assessing offshore tax arrangements to 12 years, which the committee believe would “place an unreasonable burden” on taxpayers, forcing those who do now use to offshore arrangements to keep records for an extended time.

Commenting, a government spokesperson said that HMRC uses its powers “responsibly and subject to appropriate checks and balances”.

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