THE TAXMAN is reviewing its business records checks initiative following pressure from the professional bodies, MPs and small business groups.
HM Revenue & Customs plans to check the records of up to 20,000 small businesses as part of the initiative. It has the power to charge companies up to £3,000 if their record keeping is not up to standard.
However, it announced that following consultation with the professional bodies, it will review the scheme.
The Federation of Small Businesses has attacked the initiative. "Despite the worsening economy, HMRC is launching this scheme regardless of the consequences," chairman John Walker told the Independent.
"We have spoken to HMRC and expressed our concerns about this a number of times. But as far as they and ministers are concerned it is a policy aim to make this happen. There is a huge difference between the rhetoric of the government about helping small businesses and what it is doing in reality."
The scheme was also criticised by Conservative MP Priti Patel. "This is the persecution of small businesses at a time when they are already facing a very, very hard time," she 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."
Fellow Tory backbencher Anne-Marie Morris said: "There used to be a different ethos at HMRC where they would look on minor errors sympathetically, but that appears to no longer be the case and very small businesses are being treated in the same way as larger ones with better resources."
An HMRC spokesman said: "HMRC recognises that the launch of the business records checks pilots has caused considerable concern to the tax profession, and that the project would have benefited from more detailed consultation with tax professionals at an earlier stage.
"In the light of these concerns, HMRC will undertake a strategic review of the project, in consultation with the professional and representative bodies."
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