Committees

Government must keep working to tackle tax avoidance promoters, says Lords committee report

19 December 2020

The House of Lords Economic Affairs Finance Bill Sub-Committee has published its report on the Government’s draft Finance Bill 2021, New powers for HMRC: fair and proportionate?

Key recommendations

The reports main conclusions and recommendations are:

  • The Committee is concerned that new HMRC powers are disproportionate, poorly targeted and without safeguards. The Committee also calls for HMRC to make better use of its existing powers before seeking new legislation.
  • The Government must redouble efforts to prevent the proliferation of new tax avoidance schemes. The Committee welcomes the proposals for getting tough, but calls on the Government to keep its focus on the promoters of these schemes. The report also highlights the vulnerability of lower income taxpayers to these schemes.
  • The Committee objects to the Government’s proposals for changes to HMRC's civil information powers. It is very concerned about the removal of taxpayer safeguards for information requests. The proposals are flawed and not supported by evidence.
  • The Committee is worried about 'mission creep' in the proposals for new tax checks for licence renewal applications. These checks may go beyond a simple check for tax registration, and could result in more traders becoming unlicensed.

Background

The report focuses on key proposals of the Bill which would expand HMRC’s powers to support tax compliance and tackle avoidance. It also makes wider recommendations about the Government’s approach to new powers for HMRC.

Chair's comments

Lord Bridges of Headley, Chair of the Finance Bill Sub-Committee said:

“The Government is absolutely right to get tough on the promoters of tax avoidance schemes, particularly as they continue to market these schemes to low income taxpayers.

“The Committee is, however, worried about the removal of important taxpayer safeguards such as the need for HMRC information requests to be approved by a tax tribunal. New powers must be proportionate, properly targeted and with adequate safeguards.”

Further information