Deputy Editor Sift Media
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HMRC extends Information Powers in Finance Bill 2011

9th Dec 2010
Deputy Editor Sift Media
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Next year’s Finance Bill will include an overhaul of the controversial Information Powers which control how and when HMRC can ask for information from taxpayers and what types of data it can request.

Finance Bill 2011 will see 25 of the existing powers repealed and replaced with a new single power that would take effect from 6 April 2012.

HMRC’s new Information Powers were first introduced in 2008, as part of an alignment exercise following the merger of HM Customs and Excise and the Inland Revenue.

The debate stemmed from Schedule 36 of the Finance Bill 2008, which set out various information and inspection powers HMRC wanted to implement, but controversially did not offer a right of appeal for the taxpayer. (Rebecca Benneyworth and Nichola Ross Martin were among those voicing concerns about the impact of these measures on AccountingWEB at the time).

In April 2009 HMRC updated these measures, extending the amount of time within which the HMRC can demand information from organisations’ statutory books and records from one year to six.

The new rules are aimed at consolidating the existing powers into one, more manageable set of legislation. “The new rules won’t affect taxpayers, it’s aimed at data holders, ie people with information that HMRC needs. There are 16 categories of data holder specified in the legislation, including financial institutions and insurance brokers,” Richard Davey of HMRC Powers told AccountingWEB. 

In terms of changes to be aware of, Davey insisted this wasn’t a radical shift in the rules; “There are minor extensions where existing powers were not quite adequate, but by and large it’s a modernisation process,” he said.

On the hotly debated measures in Schedule 36, Davey said the new legislation would not affect this.

HMRC says the new legislation will:

  • Allow HMRC to use bulk information powers to gather specific pieces of information about a group of taxpayers, for use in risk analysis.
  • Introduce specialist “unnamed taxpayer” powers that are narrowly defined in law to be used in very specific circumstances during a compliance check, for example where it is not clear who the taxpayer is.
  • Allow HMRC to apply to the tribunal for increased daily penalties where data is not supplied.
  • Cover data about certain foreign taxes.
  • Update Schedule 36 to Finance Act (FA) 2008 to mirror these two provisions.
  • Amend Schedule 36 to FA 2008 to provide a penalty if a person is aware of an inaccuracy when providing information or documents and to correct a minor error in the legislation.

Replies (2)

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By Peter Tucker
15th Dec 2010 11:19

Information Gathering

HMRC have huge volumes of data gathered from the PAYE and Self Assessment systems. Why then is there any need to obtain additional powers? If the current HMRC Management can not make use of the information they have, what reason, other than an inability to properly manage, can there be for Additional Powers?

The recent report on about the introduction of Real Time reporting of wages and salaries would seem to mean that there is more than enough information being supplied, without the need for ill informed members of HMRC attempting to get more?

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By Trevor Scott
16th Dec 2010 09:56

If HMRC really thinks that “The new rules won’t affect taxpayers..” then they can’t be productive or necessary.Where is the right of appeal on this? Nowhere!There are a lot of data handlers who will be forced to spend a lot of time, costing them money, helping HMRC with their fishing expeditions. Certain information will only be in the possession of one organisation. If a taxpayer under investigation realises that, he will no doubt think either the company is under investigation and in trouble, which will effect their reputation, but will almost certainly spoil or end the taxpayer's relationship and trust with that organisation-even if he hasn't done anything wrong! 

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