Greater powers given to HMRC to tackle tax avoidance and evasion are undermining the rule of law and justice, warns a House of Lords report. The Economic Affairs Committee said HMRC has been granted some broad, disproportionate powers without effective taxpayer safeguards. High penalties, designed to deter taxpayers from appealing, are a tax on justice, the committee claimed
It has demanded a review of the oversight of HMRC and its powers. Careful balance

Lord Forsyth of Drumlean, chairman of the committee, said: "HMRC is right to tackle tax evasion and aggressive tax avoidance. However, a careful balance must be struck between clamping down and treating taxpayers fairly. "Our evidence has convinced us that this balance has tipped too far in favour of HMRC and against the fundamental protections every taxpayer should expect." The Committee's report warned that some of the powers "disproportionately affect" unrepresented and lower income taxpayers. It said it took some "disturbing evidence" on the government's approach to the loan charge, a fee which was brought in to combat "disguised" pay schemes. Under these schemes, workers were paid by way of a loan, an arrangement that was intended to avoid tax and National Insurance contributions for the employee.

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