Economic Affairs Committee Contents

Chapter 1: Introduction

1.This is the fourteenth report in a series which began in 2003, when the House of Lords Economic Affairs Committee first appointed a Sub-Committee to inquire into selected aspects of that year’s Finance Bill. The Finance Bill Sub-Committee’s inquiries address technical issues of tax administration, clarification and simplification; in recognition of the House of Commons’ financial privileges, the Sub-Committee does not inquire into rates or incidence of tax.

2.This year the Sub-Committee decided its inquiry should address two areas: progress on the Making Tax Digital for VAT programme since the Committee’s March 2017 report on Making Tax Digital for Business;1 and developments in the balance of powers and safeguards between Her Majesty’s Revenue and Customs (HMRC) and the taxpayer. This report considers the latter. Our report on Making Tax Digital for VAT was published on 22 November 2018.2

3.Following our prior consideration of draft Finance Bills, our inquiry on the 2018 draft Bill has examined the development of HMRC’s powers to collect tax, acquired through successive Finance Acts. For example, this year’s draft Finance Bill included clauses to extend time limits for assessment of offshore matters.3 We have considered the broader principles that should underlie the design and development of the UK tax system, how those principles have translated to the powers Parliament has given HMRC and how HMRC is using those powers in practice.

4.The Economic Affairs Committee usually publishes the report prepared by the Finance Bill Sub-Committee before the Budget and publication of the Finance Bill itself. However, the parliamentary timetable and early Budget on 29 October 2018 meant that the report could not be published ahead of the Budget.

5.As in previous years, the Sub-Committee took written and oral evidence from stakeholders, including leading professional and business organisations, academia, accountants, tax advisers and the legal profession, as well as from HM Treasury and HMRC. We also received a great many written submissions and emails from individuals affected by the 2019 loan charge. We thank all those who contributed to our work. We are also grateful to our specialist advisers for their invaluable contribution to our work.

6.The Sub-Committee invited the Financial Secretary to the Treasury, the Rt Hon Mel Stride MP, to give evidence to the inquiry. The Financial Secretary refused to participate.4 We have serious concerns about the Minister’s failure to give evidence to our inquiry. He is not only responsible for the legislative framework we consider in this report, but also the departmental Minister for HMRC, and therefore accountable to Parliament for HMRC’s performance. Given the seriousness of concerns raised, the public has an interest in ministerial accountability to Parliament on the powers of HMRC.

7.We initially invited HMRC and Treasury officials to give evidence, but we were moved by the gravity of concerns raised in written evidence to the inquiry to consider a ministerial response more appropriate. We made this clear to the Minister and offered him several dates, but he continued to decline. We consider his reluctance to appear, in light of other evidence received in this inquiry, to be part of a wider trend of insufficient parliamentary scrutiny of tax administration. We will continue to pursue constructive solutions to the issues raised by witnesses in the coming months. The Committee has invited the Minister to give evidence on the issues raised in this report and our November report on Making Tax Digital for VAT on 15 January 2018.


1 Economic Affairs Committee, Draft Finance Bill 2017: Making Tax Digital for Business (3rd Report, Session 2016–17, HL Paper 137)

2 Economic Affairs Committee, Making Tax Digital for VAT: Treating Small Businesses Fairly (3rd Report, Session 2017–19, HL Paper 229)

3 It also considered the new penalty and interest regime to accompany Making Tax Digital which linked the topics; analysis of that regime is included in the first report.

4 Letter from the Rt Hon Mel Stride MP to the Chairman, 25 October 2018: https://www.parliament.uk/documents/lords-committees/economic-affairs/251018 FST LEAC Letter.pdf




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