E&Y survey puts Hector under fire
The accountancy profession is up in arms over the new powers the Inland Revenue will have to conduct random audits of taxpayers’ affairs under self-assessment.
A survey by Ernst & Young of more than 6,000 tax advisers found over 97% believed that undisclosed random audits would cause unnecessary cost and stress to innocent taxpayers. A further 95% feared that the Revenue would be tempted into incorporating speculative questions in what would otherwise be a focused enquiry. The results amount to a damning indictment of self-assessment by practitioners who have to advise clients on their rights under the new system.
The survey found 97% of tax advisers believed the Revenue’s approach would lead to more wasted professional and taxpayer time and greater costs.
And 82% believed self-assessment would be more confrontational than the present system.
Tax investigations partner, Phil Davis, has headed E&Y’s critical campaign against self-assessment. But, he said, he was ‘genuinely surprised’ at the depth of practitioner feeling against plans for random audits.
He said: ‘Many people are very worried that full-scale investigation procedures will be used for what ought to be routine spotchecks. Respondents had no confidence that inspectors would be willing to close a case without “finding” something to justify the time spent.’
The Revenue’s code of practice, issued earlier this year, states that the department will explain all requests for further information to the taxpayer. But Davis said this was clearly inadequate: ‘The point surely is that no Government department should have free right of access to a taxpayer’s private bank account without judicial oversight.’
He added: ‘There have been occasional official comments suggesting that self-assessment would be operated with a ‘light touch’. This needs to be confirmed in a published statement of practice.’
Separately, the Scots ICA is predicting a self-assessment ‘backlash’, with a high level of non-payment. The institute is to survey its members this autumn on the impact of the new tax regime.