The Finance Bill Sub-Committee said during an evidence session yesterday afternoon that there have been complaints about aggressive abuse of powers and failure to give adequate information to taxpayers or explain their rights.
Ruth Stanier, director general at HMRC’s customer strategy and tax design, defended the Revenue’s approach, ensuring the committee that “we want to help taxpayers get tax right and we want to apply the law fairly”.
She added that HMRC’s aim is to settle disputes according to its published litigation and settlement strategy.
Stanier disclosed to the House of Lords Sub-Committee that HMRC received 77,000 complaints last year, with 54% upheld in-full or in-part.
Only 6% of the complaints reached the second tier of the process and fewer than 1,000 went all the way to the adjudicator, representing a 15% decrease on the previous year (when 39% were upheld).
HMRC was also grilled about its Making Tax Digital (MTD) for VAT plan, which is due to launch next April.
Theresa Middleton, director of MTD for Business, admitted that the plan has met some defiance.
“I think it is fair to say there has been a mixed enthusiasm among accountants who represent small businesses for encouraging their clients who use spreadsheets to move to software,” she said.
The Revenue this week launched its online VAT pilot, which includes half a million businesses.
Stanier had previously written to Nicky Morgan, chair of the Treasury Select Committee, informing her that the Revenue will give a small minority of customers with more complex requirements a further six months to prepare for the new service before they are required to use it.
During the evidence yesterday, the director said HMRC currently has 59,000 full-time employees, and is recruiting “in large numbers” in anticipation to Brexit.
She admitted the Revenue feels “stretched” because it has a lot to do before the UK leaves the EU.
MPs also criticised the Revenue’s accelerated payment notices (APNs) regime.
Lord Forsyth of Drumlean said HMRC is “risking driving people into bankruptcy” under the regime, as it can demand tax it believes is owed without having to first establish there is a tax liability before an independent tax tribunal or court.
Taxpayers have only 90 days to pay the amount demanded in their APN with no right of appeal, which the Committee described as “putting a price on seeking access to justice”.
An HMRC spokesperson said, “All of HMRC’s powers are given to us by Parliament and are subject to appropriate checks and balances. We use the powers we have in the interests of the vast majority of individuals and businesses who play by the rules”.