Ordinary taxpayers who find themselves targeted by HMRC can be too scared and confused to fight their own corner and defend themselves.
While HMRC needs to ensure everyone pays the tax that is legally due, the balance of power has now gone too far, said Fiona Fernie, partner at accountancy firm Blick Rothenberg.
She said the taxman’s armoury has increased significantly since 2012, with “new and strengthened powers” repeatedly introduced even before existing measures have been tested.
“Some have been implemented despite opposition from tax professionals and the House of Lords Economic Affairs Committee, but without equivalent increases in safeguards for taxpayers.”
In 2021, the House of Lords warned that there is “a pattern of new HMRC powers being disproportionate, poorly targeted and without sufficient safeguards”.
Fernie said Chancellor Jeremy Hunt should resist the temptation to hand HMRC even more ammunition in his upcoming budget on March 15.
HMRC has successfully closed the UK tax gap massively in recent years, collecting 94.7 percent of tax due in 2019/20, up from 92.5 percent in 2005/06.
While that is good news as it means more are paying what’s due, the danger is that the taxman now “holds all the cards”, Fernie said.
“This includes the power to take overdue tax directly out of people’s bank accounts.”
HMRC‘s powers are overwhelming for most people, who do not have the time or financial resources to deal with an in-depth enquiry.
It means that taxpayers who are willing to correct errors and pay outstanding tax due may still be penalised as they cannot afford to fight HMRC‘s interpretation of the rules, Fernie said.
