TaxAdministrationHammer time at HMRC

Hammer time at HMRC

Tax advisers should be prepared. They are about to witness the most aggressive phase in the life of HMRC that they have probably ever seen

The Budget made that abundantly clear.

Here’s some things that are ongoing at the moment. An amnesty (that’s not
really an amnesty because there are still penalties involved) for tax not paid
on funds held overseas and a general attack on overseas tax jurisdictions; a new
name and shame policy for recalcitrant tax offenders, efforts to impose
penalties on tax advisers for not behaving as the taxman wants them to and
expansion of the schemes subject to the anti-avoidance tax disclosure regime.

You don’t have to take all this as evidence. HMRC chief executive Lesley
Strathie admits she needs to close the tax gap by £2.4bn in a year. This really
means increasing revenue by £2.4bn because no one knows how large the tax gap is
because estimates include a large margin for error.

The business plan includes the line: ‘We will relentlessly pursue the
minority of businesses and individuals who choose to bend or break the rules. We
will do this by using new IT tools, dedicated expert teams, new powers and
penalties, information given to us by the public and will pursue through the
courts where appropriate.’

What all this adds up to is the expectation of much more scepticism from the
taxman and more intrusion, at a time when HMRC staff numbers have fallen
significantly and when another stated aim is to improve ‘customer’ experience.

The central focus on closing the gap could create a culture of hostility
towards tax payers in a way that would trigger people into taking risks, pushing
them towards avoidance or even evasion. Combined with increased tax rates for
the better off, this is a real danger unless HMRC finds a more co-operative
approach.

comment@accountancyage.com

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