Press Release
13 March 2008
Budget 2008: Extension of HMRC's information gathering powers
In his Budget yesterday, the Chancellor announced proposals for a significant extension to HMRC's information gathering powers. These will be fully operative from 2009.
The legislation, which will be included in the Finance Bill to be introduced to Parliament in the next few weeks, will for the first time require third parties to provide information in relation to another taxpayer's tax affairs. This is potentially very significant in particular for banks, insurance companies, and professional advisers, who may be required to provide information about their customers. Currently, such third partes are only required to provide documents.
The proposals also include Draconian new powers of inspection of records on business premises in relation to relatively routine direct tax matters. These will be similar to the existing powers of inspection relating to VAT and PAYE. There will also be new tax-geared penalties penalising taxpayers who do not comply with information notices or allow an inspection.
James Bullock, national head of litigation and regulatory at the national law firm, McGrigors LLP, says:
"The onward march of HMRC's powers appears to know no end. Quite apart from the recent extension of criminal powers to permit telephone-tapping, we now have a right of entry and inspection on business premises in relation to routine tax enquiries.
In addition, third parties such as banks and accountants will be required to provide information – potentially amounting to value judgements – in relation to their customers' affairs. Penalties for non-compliance will also be much stiffer.
HMRC say that these powers will be balanced by wider rights of appeal. But this will be of little comfort to taxpayers already facing higher compliance costs and an increasing burden of regulation. The devil will be in the detail of the forthcoming Finance Bill."For further information please contact:
Louisa Hollins
Financial Dynamics
Telephone - +44 (0) 20 7269 7108
Email - Louisa.hollins@fd.com
Andy Peat
Financial Dynamics
Telephone - +44 (0) 20 7269 7185
Email - andy.peat@fd.com