THE taxman now has too many powers and taxpayers are being treated unfairly by them, a powerful Lords committee declares today.
The House of Lords Economic Affairs Committee report found balance has “tipped too far in favour of HMRC”.
Peers said the taxman was going “against the fundamental protections every taxpayer should expect hitting the unrepresented and lower income taxpayers”.
It follows extra powers being granted to HMRC to tackle tax avoidance and evasion in recent years.
But peers said the powers should now be reviewed because they are hitting low earners and the squeezed middle.
In a case study, one social worker, made redundant by her council, was re-employed as a contractor for five years then later retaken back by the council.
But she has now been hit by a “loan charge” she can’t afford equivalent to 18 months salary and faces bankruptcy because she paid less tax during the five years she was a contractor.
Committee chair Lord Forsyth of Drumlean said: “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.
“Since 2012, perhaps due to reduced resources, HMRC has been granted some broad, disproportionate powers without effective taxpayer safeguards.
“High penalties, designed to deter some taxpayers from continuing appeals against tax liabilities, are a tax on justice.
“We recommend a new review of HMRC powers, and an independent review to consider new oversight arrangements for HMRC.”
Last night John O’Connell, chief executive of the TaxPayers’ Alliance said HMRC had “gone too far” and the balance “had tipped against ordinary taxpayers”.
He said: “It’s important to ensure that taxpayers who have been unfairly treated get the justice they deserve.
“Britain’s hugely complex tax code places an enormous burden on ordinary taxpayers, and it’s time for the government to take bold action to simplify the system.”
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