HMRC’s tax assault to hit honest firms

A TOP City accountancy firm has claimed that a tax crackdown by HMRC will mean innocent firms being investigated at the taxpayers’ expense.

UHY Hacker said that plans to seize an additional £4bn in revenue in 2010/11 through a more aggressive strategy would leave blameless businesses facing unnecessary probes into their dealings.

The total figure to be clawed back in tax under the new strategy is £16.1bn – a 33 per cent increase on the previous year. The increased target has been set after pressure from the Liberal Democrats who believe some businesses are escaping their full tax responsibility.

UHY Hacker Young said that the only way to fulfil the new target is to bring “marginal” cases forward, which often sees legal costs spiralling while no wrongdoing is proved.

Roy Maugham, tax partner at the firm, said: “Four billion more tax is a massive increase that shows how urgently the budget deficit needs to reduced. To achieve such an extreme target, HMRC will be forced to come down hard on tax avoidance and evasion.

“HMRC’s risk profiling is already far from being perfect, with many enquiries yielding very little or no additional tax at all, so how will HMRC improve risk profiling in order to better avoid causing detriment to innocent taxpayers? Tax investigations can be hugely costly to taxpayers.”

He said that businesses were also vulnerable because if they cannot afford to fight the case, HMRC wins.

● The HMRC has set a target of £16.1bn in tax to be clawed back under a crackdown

● The figure represents a 33 per cent increase on the previous and reflects the government’s drive to boost its coffers