HMRC launches consultation on information gathering powers

On legislation day 2023 (commonly referred to as L-Day), the UK government published draft legislation outlining information on the proposed additional powers for HMRC Commissioners. This would translate into HMRC Commissioners having more control over additional information in self-assessment tax returns of individuals, partnerships and trusts. The legislation has now become section 36 of the Finance Act 2024.

Having been given these powers in the Finance Act 2024, HMRC has announced a technical consultation on the use of these powers in requesting information from employers and taxpayers.

It is proposed to introduce new requirements from April 2025. The new requirements ask for employers to provide more detailed information on employees’ hours via their real time information returns. Company Directors of owner managed businesses will be required to separately disclose the dividend received from their companies, along with the percentage of shareholdings on their self-assessment tax return. Most self-employed taxpayers will already enter the start and end date of their self-employment on their tax return; however this will now become a mandatory field.

For employees, the information needed will depend on whether the employee is paid on an hourly basis, or works under a contract, which states a specific number of hours. As suspected, HMRC is using close companies for the purposes of the new requirements. Directors in owner managed businesses will need to state the name and company registration number of the close company in addition to the information above.

We are currently gathering feedback before considering an ICAS response to the consultation, which closes on Thursday 9 May. We would really appreciate any comments from our members to help shape any ICAS response.