HMRC given power to obtain payment card transaction data from merchant acquirers

Out-Law News | 04 Sep 2013 | 5:20 pm | 1 min. read

The companies that retailers use to facilitate payment card transactions will be required to hold onto data about those transactions for four years after HM Revenue & Customs (HMRC) was given new powers to help it fight tax fraud.

Under the Finance Act 2013, which came into force on 1 September, HMRC has been given new powers to gather data stored by 'merchant acquirers', typically banks, in a move it said would clampdown on tax evasion.

A spokesman for HMRC confirmed to Out-Law.com that only merchant acquirers based in the UK would be subject to the new data gathering regime.

HMRC had existing powers to obtain four years' worth of "relevant data" held by employers, land owners and a number of other companies in other settings so as to assess whether they are paying the correct amount of tax. Now the data gathering powers have been extended to bring "a person who has a contractual obligation to make payments to retailers in settlement of payment card transactions" with the scope of the regime.

"HMRC will analyse the data using its sophisticated risking system, Connect," it said. "This cross-references and compares the data with what the tax authority already holds. The process will allow HMRC to identify fraud and evasion. HMRC has worked closely with international tax authorities – many of which have already had great success in reducing evasion, from access to such data."

HMRC said that it would not obtain card numbers or any other personally identifiable data on card owners under the new framework. It said it would send out its first requests for data this week and, following that, make further requests from next year on an annual basis.

"Tax evasion and the hidden economy cost the taxpayer £9 billion a year," Exchequer Secretary to the Treasury David Gauke said. "While the majority of traders are honest, they may find themselves undercut by the minority who seek to lower prices by cheating the tax system. The Government has given HMRC nearly £1 billion to tackle fraud and evasion, and these new powers give HMRC an extra tool to ensure a level playing field between businesses, and also reducing opportunities for those who try and cheat the system."