New powers for HMRC: fair and proportionate?
Chapter 1: Introduction
1.The Finance Bill Sub-Committee is appointed by the Economic Affairs Committee to consider technical issues of tax administration, clarification and simplification arising from the draft Finance Bill. In recognition of the House of Commons’ financial privileges, the Sub-Committee does not inquire into rates or incidence of tax.
2.This year our inquiry covered a number of measures provided for in the draft Finance Bill 2021,1 published on 22 July 2020. We also considered a further measure the Government had said it would enact in the Finance Bill but has subsequently said will be delayed until 2022, pending further consultation. The measures are:
- Tackling promoters of tax avoidance (including the related calls for evidence on raising standards in the tax advice market and disguised remuneration schemes);
- Amendments to Her Majesty’s Revenue and Customs (HMRC) civil information powers;
- A new requirement on large businesses to notify HMRC of an uncertain tax treatment (now delayed until 2022); and
- New tax checks on licence renewal applications.
3.Although these measures are generally standalone in their objectives, they each involve creating new powers for HMRC or expanding the scope of existing HMRC powers. In addition, they link to the steps being taken by HMRC to address what is commonly referred to as the ‘tax gap’.
4.The Economic Affairs Committee usually publishes the report prepared by the Finance Bill Sub-Committee shortly before the Budget and publication of the Finance Bill itself. However, COVID-19 meant that the Budget planned for November 2020 was postponed, and so this year the report is being published at a time when the date of the Budget, and publication of the Finance Bill, is unknown.2
5.As in previous years, we took written and oral evidence from business organisations, tax professionals and individuals. We also heard evidence from HMRC officials and the Financial Secretary to the Treasury, Rt Hon Jesse Norman MP. We thank all who provided written and oral evidence. We would also like to thank our two specialist advisers, Robina Dyall and Sarah Squires, for their invaluable support and assistance throughout our inquiry.
6.The Sub-Committee’s findings on each of the proposed Finance Bill measures are in Chapters 3 to 6. In addition, in our inquiry into each of the proposed measures we identified several cross-cutting issues which we discuss in Chapter 7.
1 The Bill was originally dated 2020–21, but has been redated to 2021 following the postponement of the Budget.
2 ‘Coronavirus: Autumn Budget to be scrapped this year’, BBC News, 23 September 2020: https://www.bbc.co.uk/news/business-54267795 [accessed 15 December 2020]