HMRC consult on extending data gathering powers to tackle hidden economy

05 August 2015

HMRC has published a consultation on the best way to implement powers to obtain information from electronic payment providers and business intermediaries. Online digital platforms and those businesses who fail to register for tax, and individuals who fail to declare a source of income will be targeted as part of the hidden economy that is responsible for almost a fifth of the tax gap.

In 2013 (Finance Act 2013 section 228) HMRC obtained new powers to collect data from merchant acquirers – businesses that process credit and debit card transactions. This data helps HMRC identify traders that are receiving income but are not registered for tax, as well as those who are registered but under declare their income to HMRC.

The government has now announced its intention to legislate to extend access to two similar sorts of data to help tackle the hidden economy. These changes will apply to data held by:

  • Electronic payment providers – businesses that perform a similar function to merchant acquirers by handling monetary transactions, but not necessarily in relation to credit and debit cards (increasingly these transactions are online and take different digital forms); and
  • Business intermediaries – these businesses can take many forms, for example allowing customers to make orders, purchases or reservations, relating to goods, services or digital content. Again, these businesses increasingly operate on digital platforms.

This consultation closes at 14 October 2015.