HMRC Set to Gain New Powers to Force Disclosure of Assets

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HMRC Set to Gain New Powers to Force Disclosure of Assets

Finance bill measures would allow tax authority to bypass tribunals – Financial Times

HM Revenue & Customs is set to be handed new powers allowing it to force financial institutions to pass on information about people’s assets without a court order or the individual’s approval. Banks, investment advisers, fund managers, credit unions, insurance companies, and credit card issuers will be required to divulge information about their customers if served with a “financial institution notice” by HMRC, under measures contained in the next finance bill.

Currently, HMRC can only ask a third party to provide information about an individual’s financial affairs if the person agrees or the tax tribunal approves the request. The government wants to introduce the measures, which could be in force next year, to make it quicker and easier for HMRC to share information with foreign tax authorities, as part of a global effort to crack down on evasion and tax avoidance. But the move has alarmed tax experts and the finance industry, who warns the plans will lead to an increase in requests by the tax authority. “The tax tribunal [is] a crucial safeguard to ensure proper scrutiny and not unfettered access to personal financial matters,” said Hayley Ives, director of tax resolutions at Crowe, an advisory firm. “It is therefore a worrying development that HMRC might opt to bypass this system. In some instances, without the taxpayer knowing.” If HMRC overstepped the mark, the taxpayer would be reliant on the financial institution arguing on their behalf that the information was not reasonably required, Ms. Ives said. The Chartered Institute of Taxation said it was “concerned about the loss of independent tribunal oversight, particularly in cases which involve requests for information about UK taxpayers”. Similar concerns were voiced by UK Finance, the financial services trade body, which said the measures signified a “watering down of safeguards”. HMRC said it was important for it to be able to obtain the information needed to tackle tax evasion and avoidance “in an appropriate and effective way”. “The new notice will contain numerous safeguards for taxpayers, in line with practice in all other G20 countries, and the power can only be used in specific circumstances where the information is reasonably required for the purposes of checking a taxpayer’s tax position,” the tax authority said.

Source- Financial Times