Powers of merged Revenue and Customs

The Government has launched a consultation exercise as part of 'a major review' of the powers, deterrents and safeguards of the new merged Inland Revenue and Customs Department (HMRC).

There has already been some concern expressed that existing Customs powers, such as powers of entry, could be transferred in total to Revenue inspectors.

Views are now invited from the general public on the legal powers and safeguards that the new department will need. The deadline for responding is 13 June, 2005.

Consultation

The consultation document, HM Revenue and Customs and the taxpayer: Modernising powers, deterrents and safeguards, is available on the Inland Revenue and HM Customs and Excise web sites.

In particular the consultation will cover the law and practice that governs:

• the information that is provided on a routine basis, for example in registering with HMRC or in tax returns, and is used to calculate the amount due or payable, to assess risks of non-compliance and for other purposes such as forecasting tax receipts or providing targeted support;
  
• the powers to obtain additional information and to make assessments in the course of enquiries and inspections into the amounts of tax due, to obtain evidence where an offence is suspected and to settle the tax and any interest and penalties which is ultimately due;
  
• the financial and other sanctions that can be applied in cases where complete and accurate information is not provided, the appropriate amount of tax is not paid at the right time, there is a need to deter non-compliance or to ensure that those who break the rules do not obtain an unfair benefit;
  
• the restrictions and appeal rights that apply to the use of these powers and provide an essential safeguard for taxpayers.

A consultation committee is also being set up, with representatives of taxpayers and of bodies concerned with the administration of tax and duties. The committee will consider broad options for reform, in the light of public comments, and detailed proposals for change.

CRC Bill

The Commissioners of Revenue and Customs (CRC) Bill is currently before Parliament and it is expected the new department will be set up shortly.

The CRC Bill claims to make 'no substantive changes to existing tax powers and puts in place safeguards to prevent any inadvertent widening of their scope when the Revenue and Customs merge to form HMRC.

The Paymaster General, Dawn Primarolo, announced at Second Reading that a review would be carried out to consider afresh the legal powers and safeguards that would be appropriate for the new department in the longer term.

That review is now starting, with a short consultation paper inviting comments from the general public and the setting up of a consultative committee to evaluate specific proposals.

The committee will be chaired by Dave Hartnett, IR Board member, and will have representatives from industry, small business, accountancy and the academic world, as well as members of the legal profession and representatives of the wider public, working alongside HMRC and Treasury officials.

The consultation will consider the scope for aligning and rationalising the different powers that currently apply to different taxes to make it easier for taxpayers to comply; and how best to obtain the information needed for better risk assessment and better targeted compliance activities.

Its work will be co-ordinated with the separate consultation announced in the Budget on reducing the administrative burden on small business, 'Working towards a new relationship: A consultation on priorities for reducing the administrative burdens of the tax system on small business'.

For details of the consultation paper see, HM Revenue and Customs and the taxpayer: Modernising powers, deterrents and safeguards - (pdf)