It is calling for evidence as it examines the “balance of powers and safeguards” between HMRC and the taxpayer.
The inquiry will question what principles should govern the development of HMRC powers in a globalised digital information age, and to what extent is the existing balance of powers inappropriate or unfair.
It will also look how prepared HMRC, businesses and software providers, are for the implementation of MTD for VAT in April next year, and what challenges concurrent preparations for Brexit will create.
Meanwhile, the potential costs of MTD for businesses will also be questioned, as well as the implications of having different penalty regimes for different taxes.
Lord Forsyth of Drumlean, chairman of the Sub-Committee, said, “HMRC’s powers to tackle tax avoidance and tax evasion have expanded exponentially in recent years. The Sub-Committee will investigate the practical impact of these new powers on the taxpayer.
“We want to hear from a wide range of people and organisations, in particular those who may have experienced the use of HMRC’s powers or be preparing for MTD, and we are looking for sensible, pragmatic recommendations on how the current approach to these issues could be improved.”
The deadline for submission of written evidence is 1 October.
HMRC has been approached for comment.
HMRC’s MTD plans have been criticised, with the British Chambers of Commerce calling for it to be delayed after finding almost a quarter of UK businesses (24%) have not heard of the programme.
The majority (66%) of business surveyed said they only know “some details” or only knew the Revenue’s flagship programme by name, while 25% of those that know about it have made no preparations.