HMRC May Force UK Firms To Disclose Customer Data

by Robin Pilgrim, LawAndTax-News.com, London

21 August 2009

It has been suggested that HM Revenue and Customs is seeking new powers to force companies in the UK to supply the tax authority with data on their customers as it ramps up its compliance efforts.

HMRC is currently consulting on its bulk and specialist information powers, which allows the department to obtain specific pieces of information about a group of taxpayers. The current powers date back to 1970 and HMRC argues that an overhaul of the rules is needed to take account of new information technology. However, tax experts at chartered accountants UHY Hacker Young warn that the changes could place an intolerable administrative burden on those companies called upon to supply the department with the data it needs to assess areas of compliance risk.

"These measures are going to place an expensive red-tape burden on organizations at a time when businesses are desperately looking to control costs,” said Roy Maugham, tax partner at UHY Hacker Young.

"It seems particularly unfair that HMRC says it will not reimburse businesses with the costs they incur for performing a duty that should belong to the government,” he added, noting that complying with anti-money laundering regulations is already costing businesses “hundreds of millions” a year.

HMRC has dismissed the claims as “inaccurate.”

The consultation on bulk information and specialist powers, part of the department’s sweeping review of compliance rules entitled "Modernising powers, deterrents and safeguards", was launched on July 9 and draft proposals will be published later in the year.

On April 1, a compliance checks framework came into force, giving HMRC inspectors a single set of powers to inspect business records, assets and premises.

HMRC has pledged to “relentlessly pursue” those taxpayers who knowingly flout the rules in its Business Plan for 2009/10 and intends to spend GBP1bn – about one quarter of its entire budget – on compliance and enforcement activities in a bid to claw back GBP2.4bn in revenues.

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