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April 13, 2014 9:24 pm
George Osborne’s plan to give the taxman new powers to clamp down on £10bn of tax evasion and avoidance is to face scrutiny from a powerful committee of MPs, amid fears the move could hit civil liberties.
Andrew Tyrie, chairman of the Commons Treasury committee, said his members would take “further evidence on the extension of HM Revenue & Customs’ powers”, including moves to tackle offshore evasion and a right to dip into taxpayers’ bank accounts to recover unpaid tax.
“We must be vigilant to ensure we don’t lose the essential balance between the powers that HMRC needs and protecting individuals,” Mr Tyrie said.
He said that while he sympathised with Mr Osborne’s desire to ensure that tax due was paid, his committee would look closely at whether the chancellor was going too far. “Parliament needs to pay attention when these powers are extended,” he said.
Mr Osborne wants to hand the taxman a range of powers that were hitherto seen as off-limits as the chancellor attempts to bear down on tax avoidance and evasion to plug a gaping hole in the exchequer’s revenues.
Businesses and individuals paid £35bn less in tax than they should have done in 2011 to 2012. with nearly £10bn lost to evasion and avoidance, according to official figures.
If that gap were closed, it could alleviate the need for new spending cuts after the 2015 election to eliminate the deficit: for example, Mr Osborne says that £12bn of welfare cuts will be needed.
The chancellor will on Monday announce a consultation on a new criminal offence carrying a possible prison sentence that will ensnare people with undeclared foreign income – even if they did not intend to evade taxes.
The Institute of Chartered Accountants in England and Wales says it has “considerable concerns” about the proposal, adding that safeguards are needed “to protect innocent taxpayers from the risk of mistakes or misuse by HMRC”.
Meanwhile, Mr Osborne’s declaration in last month’s Budget that the Revenue would in future be allowed to order banks to pay outstanding debts from taxpayers’ bank accounts has also alarmed some MPs.
We must be vigilant to ensure we don’t lose the essential balance between the powers that HMRC needs and protecting individuals
- Andrew Tyrie, chairman of the Commons Treasury committee
Mr Tyrie has said the policy is the source of “considerable concern” and other MPs on his committee believe it sets a dangerous precedent. Mr Osborne argued it was no different from the Revenue using its powers to enter a property and seize a television.
“I do not think this is somehow a fundamental new principle,” Mr Osborne told the Treasury committee. “I think that point was crossed many years ago.”
Last year, lawyers reacted angrily to another measure ratcheting up the pressure over tax avoidance, which gave HMRC rights to name and shame banks that did not comply with a voluntary code of conduct. Advisers said the proposals offered insufficient right of appeal to banks that were deemed to have stepped out of line.
Meanwhile, the Law Society said a planned crackdown on tax avoiders would make HMRC “judge and jury” by eroding taxpayers’ right to appeal.
Users of tax avoidance schemes will be forced to pay the disputed tax up front, under powers recently announced by Mr Osborne to accelerate the collection of about £5bn of tax.
In some cases, a taxpayer wanting to appeal would risk steep penalties, in a move that lawyers said raised constitutional issues by transferring a role normally reserved for the judiciary to an arm of the executive.
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