Costs fear over tax raids

Costs fear over tax raids

Big business is nervous over zealous Revenue investigations.

The Inland Revenue’s decision to crack down on large companies will result in damaging costs after reports that investigators are ‘going in mob-handed’ to probe company tax affairs.

Companies under scrutiny from the Revenue’s newly formed large business tax offices said last week that investigators were now demanding to see detailed tax schedules and thousands of records from a wide spectrum of company accounts.

This move, part of the government’s Spend-to-Save initiative, was increasing finance costs dramatically because companies were forced to redeploy large numbers of finance staff and spend six-figure sums on tax advice from the major accounting firms.

Marjorie Williams, head of the Revenue’s 15 large business units, has been given the task of finding a significant proportion of the u4.9bn due to be raised under Spend to Save. She leads 600 staff, many of them qualified accountants drafted into the Revenue in the last six months to intensify the attack on avoidance schemes.

A spokeswoman for the Revenue denied it had set its sights on large businesses.

‘Spend to Save is about putting resources into compliance and not about targeting particular companies,’ she said.

But Tom Cawdron, the architect of the initiative before he left the Revenue in February to head tax investigations at Price Waterhouse, said his clients were beginning to experience more intrusive questioning by Revenue officers.

‘It does not surprise me that Revenue officers are becoming more familiar with the new systems and are looking at process checking and several underlying tax issues.’

Alistair Kendrick, tax investigations manager at KPMG, said several of his clients had faced the new-style Revenue questioning. ‘The Revenue is going on extended fishing trips. It thinks it should be able to camp out on a client’s premises.’

Brian Birkenhead, former FD at National Power, said that FDs would complain if the Revenue tied up company resources by looking at areas such as hospitality.

‘This is where the Revenue has been heavy-handed and the tax take trivial.’

The Revenue has begun to monitor 3,000 companies judged to be ‘high risk’.

Companies are included on the list after they are rated by a system which includes size and their involvement in complex transactions.

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