WHY ME? The jungle rules don’t apply: Navigate HMRC’s powers before they navigate you.

Sophie Bell
Sep 23
2 min read

It has long been the practice of taxing authorities, irrespective of that country's stage of development in enforcing and collecting taxation, to make enquiries into the affairs of an individual or corporate body resident within its jurisdiction to ensure compliance with their fiscal policies, with the aim of eliminating tax evasion. Although tax avoidance is accepted as legal by these authorities, we have seen a significant change in public opinion that tax avoidance is now immoral and that an individual should consider putting morals before the preservation of wealth.

The new powers, along with several others enacted in the United Kingdom (UK) during 2004 to 2025, are designed to bring His Majesty's Revenue and Customs (HMRC) in line with other European tax authorities and any other countries with which the UK has signed a Double Tax Treaty [DTA] or Tax Exchange of Information Agreement [TEIA].

Apart from Germany and France, our EU partners, these powers extend to our much-loved cousin The United States of America (USA), otherwise known as 'Uncle Sam,' a nation I would never challenge without the aid of very competent advisers, very deep pockets and a strong constitution. When Uncle Sam decides that he wants you, he will deploy resources to get you. "Bin Laden"—you have been warned!

The IRS Whistleblower Office is a branch of the United States Internal Revenue Service, hoping to entice insiders to rat out big-dollar cheats and corporate tax shelters. The U.S. Congress directed the IRS to pay tipsters at least 15% and as much as 30% of taxes recovered.

To further strengthen HMRC's arsenal, Schedule 36 Finance Act 2008 gives HMRC the power to make a written request ('an information notice') for a taxpayer to provide information or produce a document provided that the information or document is "reasonably required" by the officer for the purpose of checking the taxpayer's tax position. Now HMRC can issue 'involved third party notices' against anyone they suspect may be able to assist them in providing information to identify a taxpayer or group of taxpayers, without the prior approval of the First Tier Tribunal.

So what does that mean? I hear you say. These powers existed before—well, yes. Schedule 36 FA 2008 replaced the majority of Section 20(A) ICTA 1970, under which HMRC was given wide sweeping powers to demand (politely) information from taxpayers, under which regime penalties were abatable. Schedule 36's draconian new penalties, in the interest of fairness, are not abatable.

The new focus on information gathering, compliance and records checking means that inevitably you will interact with your competent authority charged with the administration and collection of taxes. HMRC and others are not shy of carrying out dawn raids on business and domestic premises where, in their opinion, tax is at flight.

This book will examine the various risks and pitfalls that arise from an enquiry conducted by HMRC into the affairs of a resident in today's modern complex economy, the domestic and international powers available to the competent authorities, and remedies available to the taxpayer.