Duncan Lewis

Legal Aid

Lawyers London

The HMRC has said that under the clause of Commissioners for Revenue and Customs Act 2005 disclosure of tax affairs was not a breach of its obligation of secrecy

Date: (18 May 2012)    |    

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The confidentiality of tax affair of individuals’ is at stake with the new tax on child benefit coming into force next January.
Though the critics are raising point that it was a breach of HMRC’s obligation to keep individuals’ tax details a secret, HMRC say a 2005 Act of Parliament was armed with the authority to take such action.
That parent in a family who earn more than £50,000 a year or more would have to pay an extra tax if his or her partner is claiming child benefit.
Couples might not be willing to share their tax information with each other or child benefits in such case the HMRC is ready to provide the partners with basic information such as whether their partner’s income is over the relevant limits or they are in receipt of child benefit for their children.
The 2005, Commissioners for Revenue and Customs Act (CRCA) which had established the HMRC after merging of the old Inland Revenue and Customs and Excise is said to have the clause which makes such disclosure of tax details legal the HMRC has claimed.
Specifically, subsection (2) (a) of paragraph 18, on confidentiality, says the general rule against disclosing taxpayers' information does not apply if it "is made for the purposes of a function of the Revenue and Customs".
HMRC says that collecting the new child benefit tax, from 7 January 2013, was covered under such stipulation.
In the instant case a policy change to child benefit for those with income over £50,000 required disclosure of one claimant's information to the other, a spokeswoman for HMRC explained.
Without such disclosure, HMRC would not be able to administer the child benefit in accordance with the policy. Hence s18(2)(a) CRCA 2005 was a sound legal basis for HMRC to disclose," she added.
The legal changes necessary to bring in the new tax charge on child benefit as a policy matter of the government was confirmed in the current year's Budget and was part contained of the current Finance Bill currently being considered by the Parliament.
Chas Roy-Chowdhury, of the ACCA tax body, said that the legislation did give them the right, but only with a very limited scope, where other avenues have been exhausted which has not happened she added.
The individuals should voluntarily exchange information as the first option, and only then refer to the Revenue as a last resort she said.
Earlier this week the Institute of Chartered Accountants warned that the new tax would be an "operational disaster", partly because it will involve clawing back from one person a benefit which has been paid to another.
About 1.2 million people earning more than £50,000 a year are expected to find they have to pay more tax as a result of a partner claiming child benefit.
HMRC will send letters to all the potentially affected taxpayers this autumn to alert them to the impending tax charge, which will be collected via the income tax self-assessment system.