SMEs threatened by new revenue powers
Businesses face an unprecedented onslaught from revenue authorities as the Government bids to boost its tax yield, experts said this week.
At most risk are small and medium-sized businesses which may not be able to absorb the high-level of professional costs incurred during Inland Revenue and Customs & Excise investigations.
Price Waterhouse’s new head of tax investigations, Tom Cawdron, warned that the use of statutory powers to obtain confidential company data and documents will rise. Under Section 20 of the Taxes Management Act, the tax authorities can compel third parties, such as banks, to release confidential information about clients.
Cawdron said: ‘Revenue and Customs are continually enhancing their investigative procedures and techniques and have a wide range of statutory powers at their disposal to pursue cases.
‘Joint Revenue and Customs case working is now under way. This will inevitably lead to even more sophisticated and wide-ranging investigations.’
Colin Abrahams, tax partner at Stockport-based chartered accountants Hurst & Company, said the Government’s spend-to-save initiative would hit smaller companies even though it targeted multinationals.
‘Many of the larger companies will have the tax attributes in place which allow them to pay little or no tax,’ explained Abrahams.
‘Without changes in tax legislation it is difficult to see how spend to save can generate significant additional revenue from these companies,’ he added.
The Revenue refused to comment following the announcement of the General Election on 1 May.
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