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Lords committee calls for evidence on HMRC powers and MTD

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The House of Lords Economic affairs Finance Bill sub-committee invites written contributions by 1 October 2018 for its inquiry on the draft Finance Bill 2019, including HMRC’s progress on making tax digital (MTD).

The sub-committee will seek to examine developments in the balance of powers and safeguards between HMRC and the taxpayer. In particular, views are sought on measures proposed in the Finance Bill to extend assessment time limits for offshore matters and widen the security deposit regime to include corporation tax and the construction industry scheme.

Examination of MTD will focus on progress since the committee’s March 2017 report on ‘Making tax digital for business’.

Particular areas of interest for the inquiry include the following on HMRC powers:

  • What principles should underlie the design of HMRC powers, and where should the balance be struck between taxpayer and tax authority?
  • What principles should govern the development of HMRC powers in a globalised digital information age?
  • To what extent, or in what areas, is the existing balance of powers between HMRC and the taxpayer inappropriate or unfair?
  • How should HMRC powers be differentiated to reflect the different problems being tackled, e.g. careless error, sophisticated tax avoidance, and deliberate tax evasion?
  • How are HMRC’s powers operating in practice? Are they being used in line with their original policy intent?
  • Is there sufficient oversight of HMRC powers, and safeguards against their abuse or misuse? Does the oversight and governance of the powers need to be improved? If so, how?
  • What is the right balance of powers and safeguards in the security deposit regime and the assessment of offshore matters, for which amendments are proposed in clauses 33–35 of the draft Finance Bill?

The inquiry will also raise issues on MTD for VAT:

  • What key improvements have occurred, or new concerns have arisen, since the sub-committee’s report on ‘MTD for business’ was published in March 2017?
  • How prepared are HMRC, businesses (small and large) and software providers for the implementation of MTD for VAT in April 2019, and what are the challenges of concurrent preparations for Brexit?
  • What are the potential costs of MTD for VAT for businesses?