Honest firms 'risk tax-dodge scrutiny'

HMRC are set to come down harder than ever on tax dodging, and many honest businesses could find themselves under scrutiny as a result, UHY Hacker Young has warned.

The accountancy group has claimed the Revenue will widen the scope of its enquiry work this current tax year to include marginal cases, increasing the risk of innocent firms being caught up in the net.

The taxman is planning to claw back £16.1 billion through compliance activity in 2010/11 - an increase of 33% on the £12.1 billion recouped during the previous year.

To achieve this goal, the Revenue will have to undertake aggressive investigation work and make full use of stringent powers that include the right to visit business premises without giving advance notice, said UHY Hacker Young.

The company added that much of the money HMRC will harvest through compliance activity will not be tax that was deliberately avoided. In many cases, it will be the result of the Revenue reinterpreting tax law, with some businesses unable to afford to challenge the taxman’s decision through the tribunals and court system.

Tax partner Roy Maugham remarked, ‘To achieve such an extreme target [of £16.1 billion], HMRC will be forced to come down hard on tax avoidance and evasion.

‘The Revenue’s risk-profiling is already far from being perfect, with many enquiries yielding very little or no additional tax at all, so how will the department improve risk-profiling to better avoid causing detriment to innocent taxpayers?’

An HMRC spokesperson responded to Mr Maugham’s comments by saying the department is ‘committed to making sure the tax rules are respected through such things as improved risk assessments, a clearer focus on fraud and a better penalty regime.

‘We treat taxpayers with respect, and we believe that the majority of taxpayers are honest and want to play by the rules.’

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