Giving the 2011 CTA address yesterday, Sir Paul Kennedy proposed stronger safeguards on the use of HMRC powers and a number of measures to improve trust between HMRC and taxpayers.
Sir Paul, a retired high court judge who is currently the Government’s Interception of Communications Commissioner (which means he reviews warrants granted to public bodies under the Regulation of Investigatory Powers Act), spoke on the topic of ‘Powers...Between Citizen and State’ at the invitation of the new CIOT President Anthony Thomas.
He focused on the balance of powers between citizen and state in three areas in particular – tax, personal liberty and surveillance.
Sir Paul accepted that some intrusion into the privacy of the individual was “a necessary evil”, but argued that, when the state takes power to invade privacy the power must be linked to the purpose in hand and proportionate.
He noted that, before a local authority can use powers, they need the authority of a magistrate. This contrasted to the lack of prior authority and oversight in schedule 36 of the Finance Act 2008, which enables HMRC to enter business premises, including for random checks.
Some Revenue powers are too wide and not sufficiently controlled, said Sir Paul. The Revenue should be given only the powers that it needs and use of those powers should be closely monitored.
In a wide-ranging speech Sir Paul drew on cases from a range of different areas to make his case, from Formula 1 boss Max Mosley’s privacy case to HMRC’s action against Christopher Lunn and Company.
He concluded with a series of recommendations. Firstly, on HMRC powers, he proposed revocation of random inspection powers, that inspections without notice should require approval from a 1st tier tribunal, and that, even where prior approval is granted, taxpayers should have a right to appeal before a 1st tier tribunal different from the one which gave the approval.
Secondly, he set out a number of measures to respond to the loss of trust in HMRC which he argued was widespread: simpler, less voluminous tax legislation; greater accessibility (including a halt to the closure of HMRC phone services and offices); extending legal professional privilege to cover advice given by all qualified tax agents; training HMRC officers not just in the law but also in how to deal with advisers and the public in a helpful way.
The speech complemented incoming CIOT President Anthony Thomas’s remarks at the Institute’s AGM earlier in the day where he also highlighted the damaged relationship and loss of trust between the public and their tax advisers on the one hand, and HMRC on the other.
CIOT External Relations Manager
Wednesday 18th May 2011