Introduction Background
5.HMRC’s data-gathering powers were modernised in Schedule 23 to FA 2011 following consultation. Schedule 23 provides a framework of powers for HMRC to obtain third-party data from a range of specified data-holders, subject to appeal, with penalties for non-compliance. The data is used for risk analysis, to enable HMRC to target its compliance work more accurately.
6.Merchant acquirers were not explicitly specified as data-holders in Schedule 23 FA 2011 as originally enacted, and do not fall within any other existing categories of data-holder specified in the schedule.
7.The section applies to parties who contract with businesses to reimburse them for supplies made where a credit, charge, or debit card (or an equivalent method) was accepted as payment. This includes both merchant acquirers and businesses, known as “aggregators”, which act as intermediaries by aggregating a number of retailers under a single merchant account.
8.The data held by merchant acquirers and aggregators about payment card transactions represents a valuable source of information about businesses’ incomes. The data will be matched with data HMRC already holds to check returns and identify businesses that may not have declared their full sales, or who are not registered for tax. This will improve HMRC’s ability to identify and target those who are underpaying tax.
9.HMRC will use the data to help in the risk assessment of businesses, and will not be obtaining data about individual card holders.
10.Treasury secondary legislation is needed to specify the data that HMRC may require merchant acquirers and aggregators to provide.
11.Draft legislation was published on 11 December 2012. Following consultation, the drafting was changed to focus on the settlement of card payments, to ensure that the section is comprehensive in its coverage.