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Lords express concerns over HMRC tax crackdown

Big Ben with the houses of parliamentA House of Lords report warns that reforms to the tax code could undermine the rule of law and justice for taxpayers.

The BBC reports that new powers HM Revenue and Customs has been given to crack down on tax avoidance and evasion have stoked fears that these are disproportionate and do not include adequate protections for taxpayers.

The Economic Affairs Committee has called for a review of how HMRC’s powers are overseen after claiming that high penalties could put taxpayers off appealing, which could hurt access to justice.

This is particularly the case for those on lower incomes, where the powers could have a “disproportionately affect”, the committee warns.

Committee chairman Lord Forsyth of Drumlean says: “HMRC is right to tackle tax evasion and aggressive tax avoidance. However, a careful balance must be struck between clamping down and treating taxpayers fairly.

“Our evidence has convinced us that this balance has tipped too far in favour of HMRC and against the fundamental protections every taxpayer should expect.”

The committee raised particular concern around HMRC’s bid to crack down on so-called “disguised” pay schemes, where workers were paid by loans instead of salary to avoid tax, noting that these were often a requirement set by employers in lower income sectors.

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