New legislation that could see fines imposed on finance directors at companies with sloppy procedures for calculating tax returns is heavy-handed and inconsistent, tax experts claimed this week.

The liability rule, which was announced in last week’s Budget and will be introduced in the next Finance Bill, will require chief accounting officers in companies with a turnover of more than £22.8m and with more than 250 employees, to monitor accounting systems and report any problems to HM Revenue & Customs.

FDs who fail to do so will have to pay a personal penalty of up to £5,000, the government has said. HMRC said the rule, which it hopes will create an additional £140m in tax receipts over four years, could be extended if it proves effective.

Robert Wilde, FD at Regal Petroleum, the oil and gas exploration company, said: ‘The inference made in the plans Darling has announced is that by making this a personal liability on one director, then more attention will be paid to the matter, when in reality we treat all tax filings with absolute respect. I would not want other board members, whether here or in any other company, to be allowed under legislation to shirk their collective responsibility.’

‘Would this then mean that the quid pro quo is that I could say that most of HSE [Health and Safety Executive regulations] do not relate to me because the biggest HSE risks lie in the drilling of gas wells and this is not financial? No, it does not and nor should it be.’

Frank Haskew, head of the tax faculty at the ICAEW, told Accountancy Age TV the proposal was ‘disproportionate’ and was like ‘using a hammer to crack a nut.’

He questioned why the new law only applied applied to large companies. ‘I would have thought internal controls [within the accounts department] are just as important for small companies,’ he said. ‘This government loves bureaucracy and here is yet another example of it.’

Barry Murphy, tax partner at PricewaterhouseCoopers, said it may not always be clear who is a chief accounting officer within a company.

Law firm Brewin Leighton Paister said the FD liability rule could damage the UK’s reputation as a financial centre.