HMRC criticised for not pursuing tax ‘proportionately to circumstances’

The HMRC has been accused of causing taxpayers considerable distress as it prioritises the recovery of tax revenue over justice, according to a group of Lords, reports publicfinance.co.uk

Individuals rather than promoters of tax avoidance schemes have been targeted so HMRC can “more easily recover liabilities”, the Lords Economic Affairs Committee has said.

“We have seen little evidence of action taken against those who promote disguised remuneration schemes,” the report, released yesterday said.

“In the absence of publicised actions, HMRC appears to be prioritising recovery of tax revenue over justice by targeting individuals, rather than promoters (who could be considered more culpable).” Disguised remuneration schemes avoid income tax and national insurances contributions by scheme users being paid in the form of loans rather than in the usual manner.

The Lords said the non-ministerial department is failing to “pursue taxpayers proportionately to their circumstances”.

“We were disturbed to hear accounts of HMRC threatening individuals with arrangements that could result in bankruptcy, where individuals clearly have no assets to settle liabilities,” they added.

On the full range of tax recovery, the committee said: “There is a clear difference in culpability, for example, between deliberate and contrived tax avoidance by sophisticated, high income individuals, and uninformed or naive decisions by unrepresented taxpayers.”