TAXMAN’S NEW SPYING POWERS
HMRC wants to rifle through bank accounts with NO warning
THE taxman is to be given ‘shocking’ new powers to trawl bank accounts without the holders being told. A policy document, published quietly online this week, reveals HMRC wants to be able to keep secret investigations into whether someone is paying the right amount of tax.
Under existing rules, banks and other financial institutions are permitted to notify their customers if tax officials demand access to their bank statements and other financial information.
But as part of a bonfire of safeguards, in future the taxman will be able to draw a veil of secrecy
over its investigations. Last night, critics condemned the move – which is part of an aggressive tax crackdown – saying it is a breach of privacy.
James Daley, the managing director of Fairer Finance, said: ‘The system we have got contains essential protections for taxpayers’ privacy and rights.
‘The idea that HMRC can request information from people’s banks, from estate agents and other third parties without notifying the individual is shocking.
‘They are bypassing checks and balances that are there to protect people. Of course, we want to crack down on people who aren’t paying their taxes but there has to be a balance between that and breaching privacy. This can’t be a lazy shortcut for the taxman.’
The new powers relate to socalled information orders, used to check someone is paying the right amount of income, capital gains tax, corporation tax and VAT. Hundreds of such orders were issued last year to try to crack down on tax evasion and discover if someone has hidden assets.
They can be used to order banks, building societies, accountants, lawyers and estate agents to hand over detailed information held on someone under investigation.
But officials say the process is too bureaucratic, takes too long and uses up a ‘disproportionate amount of resources’.
Foreign governments have complained that it is so ‘onerous’ they are discouraged from making a request for information when investigating someone with a connection to the UK, the policy document says.
Now HMRC says the safeguards attached to the existing policy take up too much of officials’ time.
Currently, banks which receive a request for information are not legally barred from telling the account holder.
But the document states that ‘this runs the risk of the taxpayer being told about the notice’.
In future, with the approval of a tribunal, banks and other ‘third parties’ will be banned from alerting their customer.
The document also sets out plans to limit judicial oversight.
Currently, if HMRC asks a taxpayer whether it can access financial information and the taxpayer refuses, officials need permission from a tribunal in order to go ahead. However, in future, such probes will be signed off in-house in cases which are not kept secret. A judge will have to sign off information orders used in secret, however.
The powers are likely to be used to target international tax dodgers, but they will also be available for use in ‘domestic’ cases.
Critics warned relaxing the rules could mean the powers are used much more widely. There were 215 such requests last year.
John O’Connell, chief executive of the TaxPayers’ Alliance, said: ‘Giving the taxman powers to access taxpayers’ bank accounts without notifying them is a sinister step that would undermine fundamental freedoms.
‘HMRC gets basic tax information incorrect for millions of people every single year, so the thought of bungling bureaucrats having direct access to people’s bank accounts is deeply troubling.’
Justin Modray, of consumer advice group Candid Money, said: ‘Anything that gives the taxman more power to dive into your finances is a concern.
‘There are people who do evade tax, and the more that’s clamped down on, the better. But the fear for ordinary people is that HMRC could be poking around in your bank account and you wouldn’t know anything about it.’
An HMRC spokesman said: ‘We are considering a range of options to improve the flow of information to help establish the right tax has been declared.
‘Nothing has been decided. If these powers became law, we expect they would only apply to a few hundred cases each year.’
Comment – Page 16
‘Lazy shortcut for the taxman’ ‘Bungling bureaucrats’