Taxman jumps gun on spot-checking initiative

THE TAXMAN HAS “jumped the gun” by informing specific small businesses that their record-keeping will be spot-checked later this year, despite the consultation period not being finalised.

HM Revenue & Customs has sent letters to businesses saying they have been chosen for the first round of its new initiative to fine companies that do not have adequate record-keeping. In a meeting today with the Chartered Institute of Taxation, HMRC confirmed that these would be pilots and no fines would be levied, except in extreme circumstances.

However, the original letters did not make this clear. The Revenue told the CIOT that it will amend future letters to confirm the businesses in the pilot would not be fined.

Furthermore, HMRC has not yet published its responses to the consultation on spot checking, despite saying it was going to by the end of March.

Anthony Thomas, CIOT deputy president, said: “HMRC’s reassurance that this is a ‘test and learn’ pilot where no penalties will be levelled, other than in exceptional circumstances, is welcome. However they should have made this clear to tax advisers, business organisations and, above all, those taxpayers – represented and unrepresented – they are targeting, from the outset.

“By not doing this HMRC gave the strong impression that they were proceeding with this project prematurely and without listening to consultees.”

Anita Montieth, head of tax at ICAEW, said: “They have jumped the gun and it is unfortunate they did not tell us that they were going to send these outs. It is all about talking to us”. She added that these letters “seem disconnected to the consultation itself”.

An HMRC spokesman said: “We do not accept that they were sent prematurely. We want to see how far we can take this forward without fines and to be as supportive as possible for businesses.”

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