The Powers of HMRC: Treating Taxpayers Fairly has recommended a review of HMRC’s ‘aggressive approach to tax collection’, which has seen IR35 reform introduced to the public sector last year and private sector changes announced for 2020.
The report - which Financial Secretary to the Treasury, Mel Stride, refused to participate in - also called for an ‘urgent review’ of all loan charge cases.
Seb Maley from Contractor specialists, Qdos, said: “This report is a damning indictment of HMRC’s behaviour in recent years, which has directly impacted thousands of contractors, the vast majority of whom actually pay the right amount of tax.
“It’s clear HMRC’s attitude towards taxpayers needs to change. Approaching cases from a guilty until proven innocent is unjust and has had a hugely damaging effect on taxpayers, irrespective of whether they are contractors or not.
“In the past, HMRC’s aggressive pursuit of contractors has had disastrous consequences. We wholeheartedly agree with the view that this needs to stop.
“With further IR35 reform on the horizon, it’s vital these recommendations are taken seriously and appropriate changes made to the way HMRC enforces tax compliance.
“However, Mel Stride refusing to give evidence in the inquiry speaks volumes of HMRC’s unwillingness to listen to these concerns.”
Qdos research into 800 contractors showed 95 per cent believe HMRC’s approach to tax compliance is aggressive, rather than fair.
Freelancer group IPSE also supported the criticism in the report of HMRC's ‘aggressive’ compliance efforts on the 2019 Loan Charge.
The House of Lords urged HMRC to refocus its compliance efforts on those who promoted and profited from the off-shore loan schemes. The report recommends a more reasonable approach to those who have suffered tremendous strain because of the schemes.
Andy Chamberlain, IPSE’s Deputy Director of Policy, said: “HMRC’s aggressive approach to the 2019 Loan Charge has caused financial ruin and serious emotional distress for tens of thousands of taxpayers and their families.
“A central criticism of the House of Lords’ report is that HMRC has been too aggressive in its pursuit of those who used the schemes. Instead, like IPSE, the report calls for HMRC to re-focus its compliance efforts on those who had promoted and profited from their use.
“The report’s description of HMRC’s approach as ‘aggressive’, ‘unfair’, ‘devastating’ and a ‘tax on justice’ is a damning indictment of a retrospective taxation which has left many with substantial repayment demands. Indeed, at a recent Westminster Hall Debate, a group of cross-party MPs called on the Government to stop applying the tax retrospectively.
“IPSE recently wrote to the Chancellor to urge the government against this most aggressive approach to tax compliance. With IR35 reforms already ravaging the self-employed, HMRC must find a better balance and treat taxpayers fairly.
“It is right to tackle tax evasion and tax avoidance but its approach – which HMRC itself has conceded will cause some individuals to ‘become insolvent’ – is having a chilling effect on our flexible labour market.”
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Susie Hughes © Shout99 2018