The rules would also strip tax advisers of an exclusion which currently removes them from the pool of people the taxman can probe regarding tax avoidance arrangements.
But the Lords committee has found that the removal of such safeguards for taxpayers and institutions was “wrong in principle” and “not justified”.
It said: “We believe the government’s reasoning behind these proposals is flawed and not supported by evidence.
“We note that there is a pattern of new HMRC powers being disproportionate, poorly targeted and without sufficient safeguards.
“In some cases, expansive new powers are being granted to deal with problems that appear to be marginal and only affecting a small minority, increasing compliance costs for everyone.”
The draft Finance Bill is part of the government’s wider push on tax avoidance. Originally announced in the March Budget, the government pledged extra funding to support HMRC’s crackdown on tax avoidance, which the chancellor said would create an additional £4.4bn in revenue over the next five years.
At the time, Rishi Sunak promised to “raise standards” in the market of tax advice and target the promoters of tax avoidance schemes.
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