The weapons in the taxman’s armoury used to glean information from taxpayers
have long been a bone of contention. Advisers and taxpayers have accused the
taxman of being too heavy-handed, partially off the back of the so-called
modernisation of its powers.
The CIoT held a round table to discuss the first year of the modernisation
programme last week, flagging up some of the problems. The taxman can currently
request information on a formal or informal basis from a tax adviser and this is
a concern for the profession because of the danger of disputes with clients for
Under the new powers regime, HMRC also has the right to make enquiries –
known as discovery assessments – relating to a person’s past, present and future
tax position, which also concerned CIoT round table attendees .
The boundaries for when the taxman can ask for extra information after an
enquiry has closed have also been extended. “The rules about discovery have got
to be completely rethought,” said one tax expert at the meeting. “It’s four
years of ‘open season’ otherwise.”
According to the round table experts, the most pressing fears about
“excessive and inappropriate” use of the new powers were thankfully unrealised.
However, HMRC has an arsenal of powers at its disposal, including enquiries,
information notices and pre-return assessments. Advisers and clients are unsure
of which applies to what situation.
“We have found a lack of clarity about what powers will be used in which
circumstances, or how formal and informal powers interact,” a CIoT report
stated. “There is a clear need for a ‘route map’ showing taxpayers and their
advisers how the various powers and sanctions fit together.”
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