Is the taxman really guilty of human rights abuse?
New legislation governing the right of HMRC to acquire data and information have the capacity to breach human rights says Roger Barnard, director of tax at Tenon
A public consultation with the potential to significantly strengthen existing
powers for HM Revenue & Customs has been met cautiously, with some advisers
arguing the proposals are already in practice.
Legislation governing the right of the department to acquire data and
information came into effect on April 1, largely focusing on how HMRC approaches
taxpayer compliance checks across a range of taxes, including corporate tax, VAT
and PAYE.
According to HMRC, the legislation was brought in to make the tax system
‘simpler and more consistent’. However, a further proposal – that would give the
taxman the power to seize large or ‘bulk’ batches of information at once – is
leading many to question whether the consultation process is going to have any
sway.
But Roger Barnard, director of tax at Tenon, says the real question is
whether HMRC should have the bulk powers at all, and says there needs to be
sufficient protection for taxpayers.
‘It’s a tricky one and needs to be looked at seriously. It’s easy for
parliament to grant the power and say it will only be used in certain
circumstances, but the statute might provide for it to be opened up at any time.
That’s the nature of power,’ says Barnard.
He believes the proposals have the capacity to breach human rights if the
consultation proposals aren’t properly debated. ‘Part of me thinks it’s big
brother… what personal rights will taxpayers be able to retain? Our job is to
protect our clients and make sure they’re not subject to onerous burdens,’ he
says.
The consultation paper stipulates a formal introduction of bulk information
powers that would allow the department to ‘gather specific pieces of
information about a group of taxpayers for use in risk analysis.’
The department’s new disclosure opportunity – designed to capture taxpayers
who have not paid tax on interest earned in bank accounts held offshore – has
alread y seen HMRC obtain a blanket disclosure notice from the tax Tribunal to
serve to banks about their customers.
The approach has been described as ‘placing banks on a conveyor belt’, and
according to Steve Besford, tax associate at BDO Stoy Hayward, there is
currently no capacity under the existing information powers which would allow
HMRC to obtain such an order.
‘It’s confusing in those terms that HMRC thinks it could cover every
conceivable bank,’ he says.
The deadline for submitting comments or recommendations on the proposals is 1
October 2009.