Consultation was launched on an amendment to Schedule 36 Finance Act 2008 which it is proposed will bring HMRC's information powers into line with the international standard for the exchange of information for tax purposes.

Part of HMRC's ‘Modernising Powers, Deterrents and Safeguards’ project, the consultation aims to ensure that HMRC can collect information in specific cases where the full identity of the taxpayer is not known but can be ascertained by reference to other available information.

HMRC advise that on one particular issue, it has been concluded by the Global Forum on Transparency and Exchange of Information for Tax Purposes that HMRC's information powers do not allow the UK to exchange information under its network of tax treaties to the international standard.

The international standard requires a jurisdiction to exchange information in response to a valid request from an overseas revenue authority where the taxpayer is identified, whether by name or by other identifying information. Schedule 36 does not currently provide for this to happen where the taxpayer's name is not provided.

Legislative change is therefore needed to bring the UK into line with international standards. This shortcoming strictly applies only in relation to the UK's ability to exchange information. In the main this would impact on foreign taxes although there could be circumstances where UK tax is involved.

But any change limited to extending the powers for foreign taxes only could contravene European Law, as in substance the UK would have greater enquiry powers for overseas taxpayers compared to UK taxpayers. Accordingly, the Government has decided that a change allowing a notice to be issued where identifying information about a person is held, but the full identity is not known, should apply for all taxes covered by Schedule 36.

The consultation considers possible ways in which legislative change may be made and closes on 29 September 2011. More information can be accessed at http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&propertyType=document&columns=1&id=HMCE_PROD1_031428