We are certain that our clients are honest and do their best to comply with their tax obligations. They do not ask for favours from the tax office, but expect to be treated fairly. Recent revelations suggest, however, that this expectation is very badly misplaced.
The tax office has recently been accused of double standards over plans to target thousands of small businesses with spot checks on their paperwork. Officials from HM Revenue and Customs with powers to fine small businesses £3,000 intend to inspect up to 20,000 firms to see if they have adequate proof of expenses and income dating back years in a new drive set to begin in April. At the same time they have agreed to let large companies such as Goldman Sachs off millions of pounds in tax.
The move was condemned by business groups who warned it risked bankrupting some businesses and harming the already depressed economy. “Despite the worsening economy, HMRC is launching this scheme regardless of the consequences,” said John Walker, national chairman of the Federation of Small Businesses.
During a pilot exercise last year, 12 per cent of the businesses examined were judged by the tax office to have record-keeping practices that were significantly sub-standard. If the same percentage was found to be at fault in the full checks then total fines could reach £15m. At the same time, the Permanent Secretary of H M Revenue & Customs, David Hartnett, supervised and signed off a deal that saved Goldman Sachs around £10m in tax. This revelation only came to light after a whistle-blower exposed the “sweetheart” deal. Similarly, Vodafone settled a long-running dispute with the tax office by paying £1.25bn, when a Commons committee heard allegations that the tax bill should have been £6bn or more, a saving in tax of at least £4.75bn!!.
One MP said “The attitude of HMRC to small businesses is frankly disgraceful when they are blatantly doing deals with large firms which have allowed them to escape millions of pounds in tax liabilities. It seems as though HMRC sees small businesses as low-lying fruit to meet their targets. That kind of persecution is outrageous.”
David Hartnett, head of the tax office, has been described as Britain’s most ‘wined and dined’ civil servant. We note, without suggesting any connection, that these benefits were provided wholly by large companies! I am certain that our clients would also be interested to know whether these benefits were declared on his own tax return, and the appropriate amount of tax paid!
WatkinsonBlack are pleased to advise on these and other matters. They have considerable experience in these and other matters, including providing a very cost-effective payroll bureau service. We also offer a very cost effective insurance against the cost of protecting yourself against these tax office fishing trips. If you want to arrange a no-obligation initial meeting on any taxation or accounting matter then please contact us. Please note that these ideas are intended to inform rather than advise and you should always obtain professional advice before taking any action.
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