HM Revenue & Customs’ decision to extend its enquiries into corporation
tax self-assessment returns in order to cover the personal taxation and
financial affairs of company directors is a step too far.
I am becoming increasingly concerned by the Revenue’s latest attempts to
extract information from taxpayers, mainly from within the SME sector.
Apart from the change in attitude and approach – it has gone from being a
user-friendly department to a zero-tolerance organisation with the setting of
totally unrealistic deadlines – the Revenue is seeking to make feeble attempts
to try and extend enquiries into corporation tax self-assessment returns so that
they cover the financial affairs of the directors.
I have strong objections to HMRC conducting itself in this manner and I’m
sure I will not be alone once this becomes more widely known.
I believe that these approaches are the result of some sort of edict being
handed down from head office, but the various arguments being raised are really
In fact, far worse than simply being ethically questionable, the actions of
certain inspectors who have contacted me are, in fact, in breach of their own
internal instructions contained within the enquiry manual EM8508, which deals
specifically with extending enquiries into directors’ affairs.
Section 20 of Information Powers represents an extremely powerful weapon in
the hands of HMRC and is now being used, misused and abused by inspectors, who
dislike the constraints of the self-assessment enquiry regime and resent not
getting their own way throughout the approved enquiry process.
However, I will not be cajoled by the spurious arguments of the Revenue to
overcome these frustrations. Legislation and rules are in place for a reason and
these should not be abused by the taxman as a scare tactic for the uninitiated.
While my clients are of course represented, there are thousands of taxpayers
out there who do not use the services of professional accountants and there is
no question that the Revenue will seek to persecute the weak with these
scattergun tactics. I urge these SMEs to beware.
Barry Lewis is senior partner of Harris Lipman Chartered
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The UK tax gap fell in 2014-15 to its lowest-ever level of 6.5%, revealed official statistics published today
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