The UK’s Lords Economic Affairs Committee has published a report on the powers of HM Revenue and Customs (HMRC) stating that its “aggressive” pursuit of tax avoidance is not prioritising “more culpable” individuals.
The report recommended for the government to undertake a full review of HMRC’s powers.
The committee was also highly critical of Mel Stride, the financial secretary to the Treasury, who was invited to give evidence but refused to participate.
It further called for the 12-year increase into offshore investigations to be stopped as it was considered “unreasonably onerous and disproportionate to the risk” especially by placing the burden on to the taxpayer. HMRC already has a 20-year limit to deal with fraud cases.
Revenue over justice
HMRC was also criticised for the “little action” taken against promoters of tax avoidance schemes as it disproportionately focused on single individuals to “prioritise recovery of tax revenue over justice”.
In addition, the recommendations included the right for the taxpayer to appeal to the tax tribunal and a shift in the way policy consultancy by HMRC was conducted.
That came as the report found that consulting was “too frequently omitted” causing the implementation of broad and badly targeted legislation, that would lead to a far higher level of discretion in the hands of HMRC.
The committee recommended that “all powers granted to HMRC since the conclusion of the Powers Review in 2012 should be evaluated, and those evaluations published. All future powers should be evaluated after five years”.
A review of the powers would clamp down on the culture of harshness present in the HRMC and its staff, as it does not take into consideration fair treatment of the taxpayers, the committee concluded.
