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UHY Hacker Young has attacked the Revenue for its ‘aggressive’ tax investigations, which the accountancy group claims have come at ‘significant costs to innocent taxpayers’.
The company’s comments were in reaction to newly released figures that show HMRC have retrieved £39.5 billion in clampdowns on tax avoidance and evasion since the department was formed in 2005
In the first 12 months of its existence, HMRC generated £7.4 billion through tax enquiries and other compliance work. The figure jumped by 64% to £12.1 billion in the year to 31 March 2009.
UHY Hacker Young criticised the taxman for continuously seeking ‘tougher and more intrusive powers’. The firm added that the steep rise in extra tax acquired through investigations is partly as a result of ‘the increasing number of mistakes being made by taxpayers as the tax system grows ever more complicated’.
Tax partner Roy Maugham said: ‘The amount of money [the Revenue] is taking in through compliance work is huge, but this hasn’t come without significant costs to innocent taxpayers.
‘Since HMRC’s formation, the Revenue side… has been lobbying to gain the draconian powers that Customs have to deal with the threat of drug smugglers and arms dealers.
'The result is that HMRC now has sweeping powers to enter business premises to conduct a search without warning beforehand and to make arrests without the need to be accompanied by a police officer.’
Mr Maugham went on to lambaste the Revenue for ‘using increasingly controversial methods to tackle tax evasion’, including the purchasing of stolen offshore bank account details.
‘With the current state of the public finances, HMRC’s aggressive stance on tax investigation work is likely to become ever tougher,’ he said.
He claimed the Revenue’s ‘no mercy’ attitude to compliance could encourage UK-domiciled multinationals to relocate, and the department may be spending a disproportionate amount of resources on investigating small businesses given the ‘relatively modest amounts of money that [the taxman] collects through self-assessment enquiries’.
A spokesperson for HMRC responded to UHY Hacker Young’s criticisms by saying, ‘We operate at all times within professional codes of conduct and our customers’ charter makes clear that we will treat all taxpayers with respect and a presumption of honesty unless there is evidence to the contrary.
‘We use the powers we have with discretion and with sensitivity to the rights and obligations of taxpayer at all times.’
