Extension of HMRC data gathering powers to include credit and debit card details

On 23 July 2013 HMRC published amendments to the data gathering powers regulations which were included in the March 2013 budget and will come into force on 1 September 2013.

The regulations have been amended to allow HMRC to use these powers to require card payment processors to provide data about their customers.  The changes will allow HMRC to request as data on credit, debit and charge card sales of the retailer; the retailer’s name, address and VAT number if applicable and bank account details.  HMRC will not however be able to obtain data relating to individual card holders.  The data will be used to check whether businesses have suppressed their income or operated within the hidden economy.

These amendments represent an extension to the data-gathering powers introduced under Schedule 23 FA 2011 which brought into force new powers enabling HMRC to request specific pieces of information about a group of people for use in risk analysis.  The ability to acquire bulk information is, according to HMRC guidance, essential due to the large number of taxpayers within the system and the related administration costs.  These data-gathering powers differ from the information and inspection powers contained within Schedule 36 FA 2008 as they cannot be used for checking the tax position of the data holder.  However, nothing in the purpose or scope of the power restricts what the data can be used for once acquired.

A data-holder notice may be issued to a ‘data holder’ and this is defined as an individual in possession of ‘relevant data’. The HMRC guidance provides a list of data holders and examples of the relevant data they may hold which would fall within this notice.  For example, employers are included as those holding relevant data regarding salaries and fees and the list of data holders includes those through whom interest is paid or credited.  Details of individual names and addresses may be included as part of the request for relevant data.

In line with the information powers under Schedule 36 there is a limit to how far back HMRC can request data and it must be within the power or possession of the data holder. If the notice has the approval of the Tribunal then there is no right of appeal and penalties will apply for a failure to comply with the notice.

The data-holder notice may specify the ‘means and form’ in which the data holder must provide the relevant data. ‘Means and form’ includes being able to stipulate the structure and medium through which data is required. The ‘means and form’ must be reasonable and what is considered reasonable depends on the circumstances and ability of the data holder.

The extension to include card payment processors is yet another example of the widening of HMRC’s information gathering powers and the concerns, as always, are that such requests for information are valid and that the information requested is relevant data, as defined in the legislation. If advisers have any concerns over such notices, specialist advice should be sought to protect client’s interests.

Gabelle can advise on all aspects of information notices and help minimise exposure for clients. For further details on this extension to HMRC’s powers or generally on information requests please call the TaxDesk on 0845 4900 509 and ask to speak to Isobel Clift.