HMRC urged to improve support to vulnerable taxpayers

MPs on the influential Treasury Treasury Sub-Committee have urged HMRC to urgently review and improve the accessibility, quality and level of detail of the guidance it makes available to vulnerable taxpayers.

While it applauded HMRC’s measure to improve its approach to taxpayers involved in tax disputes, the Treasury Sub-Committee has asked the tax authority to go further and overhaul the way it deals with vulnerable taxpayers.

HMRC was told it should provide a clearer explanation of its definition of ‘vulnerable’ when it comes to identifying such customers.

“We have heard that it is too difficult for anyone involved in a tax dispute with HMRC, and with little knowledge of the tax system, to find adequate information from HMRC to help them understand the law and their rights,” the sub-committee said.

It also criticised the way HMRC has dealt with the loan charge issue, explaining that the delay in clarifying payment terms for those wanting to settle their past use of such schemes has caused widespread anxiety and distrust.

HMRC was told to closely monitor its response times to dealing with loan charge issues and to report back to the committee on the progress in providing settlement calculations.

It was also advised to vigorously pursue the promoters and enablers of avoidance schemes to the full extent of its powers, and update the committee on how it will deal with tax advisers who continue to promote or enable tax avoidance.

“One of HMRC’s key responsibilities, as required by Parliament, is to protect public funds from tax avoidance. As such, HMRC introduced the Loan Charge to tackle the use of disguised remuneration schemes, which it describes as an anti-tax avoidance measure,” said John Mann, chair of the Treasury Sub-Committee.

“HMRC’s measures to improve its approach to vulnerable taxpayers are welcome, but it must urgently improve the guidance available for those involved in tax disputes.”