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Fears UK taxman is planning fishing trips

Legal experts are worried the removal of tribunal oversight on financial data requests from HM Revenue & Customs will launch speculative “fishing expeditions” against taxpayers.

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HMRC is currently consulting on new powers to drop the requirement to apply to a tax tribunal before submitting information requests to third parties.

The move will also see third parties lose the right to appeal against data requests, except in circumstances when providing the information would be “unduly onerous”.

Currently, HMRC can only access financial information with the consent of the taxpayer, unless a tribunal rules otherwise.

Financial institutions must also notify the customer that HMRC has requested access to their financial information. However, tax inspectors want to prevent prior notice being given and believe that involving the tribunal process is not efficient.

Alarm

Commenting on the proposals Jason Collins, partner at law firm Pinsent Masons, said the move for unfettered access would trigger alarm.

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

“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.

“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.”

Denounced

Tax preparation expert David Redfern, director of DSR Tax Claims, denounced the proposal as an unreasonable invasion of taxpayers’ privacy and urged HMRC to reconsider.

“Although HMRC is correct to crack down on tax evasion, which costs the UK extensively each year, HMRC is overreaching its powers with this latest proposal.

“HMRC already has the right to access the financial information of taxpayers and can request an Information Order should the evidence deem it necessary – however, to allow HMRC to have secret access to financial information is an alarming suggestion and is a further step towards eroding civil liberties.”

Redfern added: “HMRC state that they believe that these powers would only be used for a few hundred cases per year and therefore shouldn’t cause much concern – however, if these cases are so few and far between, then their argument that the current process is too wasteful of their resources seems facile.

“In seeking to access bank account information in secret, HMRC appears to be extending its powers in an intrusive and troubling manner.”

The proposals, titled ‘Amending HMRC’s Civil Information Powers’, are out to consultation until 2 October 2018.

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