HM Revenue and Customs is set for new powers that will mean it can compel financial institutions to pass on information about an individual’s assets without the need for a court order or that person’s approval.
Under measures contained in the next finance bill, banks, credit unions, fund managers, investment advisers, insurance companies and credit card issuers will have to hand over information about their customers if they are served with a financial institution notice by HM Revenue and Customs (HMRC). At present, HMRC can only ask a third party for information about an individual’s financial affairs if that individual agrees to it or a tax tribunal approves the request.
Under the proposals in the finance bill, the new measures will give HMRC the power to issue notices to financial institutions so that it can make checks on an individual’s assets or the collection of tax owed.
The move is part of a government attempt to make it easier for HMRC to share information with other countries’ tax authorities in order to tackle tax evasion. It could come into effect next year.
HMRC has said the new measures will enable it to function in “an appropriate and effective way”.
It added: “The new notice will contain numerous safeguards for taxpayers, in line with practice in all other G20 countries, and the power can only be used in specific circumstances where the information is reasonably required for the purposes of checking a taxpayer’s tax position.”
The UK is the only G20 country where a third party notice can only be issued with either tax tribunal approval or the consent of the individual concerned.
But concerns have been voiced that the change will lead to increased numbers of requests by HMRC. There is also a fear that the new powers will enable HMRC to bypass the tax tribunal system and obtain information about the individual without their knowledge. The Chartered Institute of Taxation has said it is concerned about the loss of independent tribunal oversight.