HMRC gets the retaliation in a vicious fiscal circle

On Monday this week Tory economic spokesman Justine Greening, (a qualified accountant too) was complaining that HMRC could push businesses over the edge by harshly demanding tax bills be paid. Then Tuesday (yesterday) saw the taxman strike back revealing statistics that it had discussed or rearranged payments of more than £400m of tax bills through its business payment support service helpline. That’s more than £160m of payments rescheduled over the phone while a further £270m is being considered further after initial discussions.
That’s a result and the taxman seems to be doing its bit. There’s no doubt that some of those tax bills would help drive companies under if they were not rearranged.
However, it’s worth putting this into context. HMRC expects to collect £45bn in corporation tax in 2008/09. That £400m therefore looks like it will only be scratching the surface.
HMRC will have to tread very carefull to avoid the Tories being able to say that its claims are true – the tax man is killing businesses because of an over zealous attitude towards collection. It’s entirely conceivable that political masters are already piling the pressure on HMRC to tread lightly. It wasn’t so long ago that the taxman was building a reputation, once again, of inflexibility in its attitude towards collection. After all, the government could see receipts dropping off and wanted to make sure there was plenty in the kitty to pay for its spending plans.
How things change. HMRC has clearly not gone all cuddly but it’s obviously easing the pressure. But then, that may just reduce tax receipts, and therefore threaten government spending plans and… blimey, the whole thing suddenly looks like a vicious fiscal circle to manage. Wonder how it will all work out?

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