The CIOT has responded
to HMRC’s consultation on draft Finance Bill legislation to introduce a new financial institution
notice (FIN), which would require financial institutions to provide information
to HMRC about a specific taxpayer on request, without the need for tribunal
approval.
The CIOT notes that HMRC is not taking forward a number of the proposals originally
put forward in its 2018 consultation Amending HMRC’s civil information powers. This includes ‘option 1’ which would have
involved removing the requirement to obtain tribunal approval in all cases.
The CIOT expresses
concern that, rather than consulting fully on the detailed policy design, the
process has moved straight on to consultation on the draft legislation which
will give effect to the proposal, and thus limits scope for substantive changes
to policy design.
One key point to note
is that the draft Finance Bill legislation suggests there will be no right of
appeal against the issue of a FIN, even if it would be unduly onerous for the
institution to comply with the notice. This would contrast with the position
for existing third-party information notices, where the right of appeal on
grounds of unduly onerous compliance is built into FA 2008 Sch 36 para 30.
If there is to be no
‘unduly onerous’ appeal option, the CIOT urges HMRC to provide guidance on how
complaints from financial institutions will be dealt with where obtaining the
information is unduly onerous. Commenting on the proposals, Sarah Saunders, manager
at RSM, notes in a firm’s client briefing that: ‘The tax system requires
checks and balances to stop either side exercising excessive power. It is not
unreasonable to require HMRC to justify complex information requests and
institutions should be protected from excessive demands.’
The CIOT also
questions how HMRC would use the new FIN in practice, for example where
HMRC issues a notice to request information about UK taxpayers during the
course of a domestic enquiry but existing third-party information powers under
Sch 36 require tribunal approval and also provide a right of appeal.
The CIOT has responded
to HMRC’s consultation on draft Finance Bill legislation to introduce a new financial institution
notice (FIN), which would require financial institutions to provide information
to HMRC about a specific taxpayer on request, without the need for tribunal
approval.
The CIOT notes that HMRC is not taking forward a number of the proposals originally
put forward in its 2018 consultation Amending HMRC’s civil information powers. This includes ‘option 1’ which would have
involved removing the requirement to obtain tribunal approval in all cases.
The CIOT expresses
concern that, rather than consulting fully on the detailed policy design, the
process has moved straight on to consultation on the draft legislation which
will give effect to the proposal, and thus limits scope for substantive changes
to policy design.
One key point to note
is that the draft Finance Bill legislation suggests there will be no right of
appeal against the issue of a FIN, even if it would be unduly onerous for the
institution to comply with the notice. This would contrast with the position
for existing third-party information notices, where the right of appeal on
grounds of unduly onerous compliance is built into FA 2008 Sch 36 para 30.
If there is to be no
‘unduly onerous’ appeal option, the CIOT urges HMRC to provide guidance on how
complaints from financial institutions will be dealt with where obtaining the
information is unduly onerous. Commenting on the proposals, Sarah Saunders, manager
at RSM, notes in a firm’s client briefing that: ‘The tax system requires
checks and balances to stop either side exercising excessive power. It is not
unreasonable to require HMRC to justify complex information requests and
institutions should be protected from excessive demands.’
The CIOT also
questions how HMRC would use the new FIN in practice, for example where
HMRC issues a notice to request information about UK taxpayers during the
course of a domestic enquiry but existing third-party information powers under
Sch 36 require tribunal approval and also provide a right of appeal.
