HM Revenue & Customs wants to be able to probe your client’s accounts without authorisation from a tribunal.
In a 29-page paper published today (10 July), the government proposed an overhaul of the tax office’s powers so it will no longer need tribunal approval if it wants to access your client’s bank accounts to check they are paying the right amount of tax.
If information or documents reasonably required by HMRC for the purpose of checking a taxpayer’s tax position are in the power or possession of somebody other than the taxpayer, the government is proposing that in the future a tax officer may issue a third party notice.
This would require the third party to provide the relevant information or documents to HMRC.
Justifying the move, the government said the UK requirement for tribunal approval was heavily criticised for adding significantly to the time taken to respond to requests for banking information from other jurisdictions.
HMRC stated none of 18 other countries reviewed back in 2013 required tribunal or court approval before issuing a third party notice.
HMRC stated: "These older processes not only leave the UK out of line with the rest of the world, but also out of step with new innovative approaches to sharing information."
Currently before a third party notice can be issued HMRC has to either obtain the agreement of the taxpayer to probe their accounts or seek the approval of a tribunal.
And at present before approaching the tribunal HMRC must contact the person to whom the notice will be addressed, tell them what information or documents are required and give a reasonable opportunity for them to make representations to HMRC.
The taxpayer must have been given a summary of the reasons why the information or documents are required.
Tim Stovold, head of tax at Kingston Smith, said: "HMRC wants to remove the protection that ordinary citizens currently have from intrusion into their private financial affairs from the state.
"At the moment a Tribunal has to agree that HMRC can examine private bank accounts without the account holder’s permission.
"HMRC intends abolishing the need to seek authorisation from a Tribunal which would remove a vital public safeguard."
emma.hughes@ft.com
