HMRC has been conducting ‘spot checks’ on businesses across the country as part of its initiative to recover £7bn in unpaid taxes. This is all well and good, except that SMEs have criticised the Revenue for employing bully boy tactics to wheedle money out of small businesses that are already cash-strapped and facing possible bankruptcy.
Small businesses subjected to these so-called spot checks – some 20,000 of them will be targeted in total - have been asked to produce paperwork going back many years to corroborate former tax returns. Those who are unable to come up with the goods are slapped with a £3,000 fine.
John Walker, national chairman of the Federation of Small Businesses, is flabbergasted by the Revenue’s methods: ‘Despite the worsening economy, HMRC is launching this scheme regardless of the consequences. There is a huge difference between the rhetoric of the Government about helping small businesses and what it is doing in reality,’ he says.
And the recent love-in with certain large corporates certainly hasn’t helped. As Priti Patel, Tory MP for Witham, points out: ‘The attitude of HMRC to small businesses is frankly disgraceful when they are blatantly doing deals with large firms which have allowed them to escape millions of pounds in tax liabilities. It seems as though HMRC sees small businesses as low-lying fruit to meet their targets. That kind of persecution is outrageous.’
Following the national outcry from the SME community, an HMRC spokesman has admitted that there is a problem: ‘HMRC recognises that the launch of the Business Records Checks pilots has caused considerable concern. In the light of these concerns, HMRC will undertake a strategic review of the project, in consultation with the professional and representative bodies.
‘The findings will be shared in January 2012, and final decisions will be made by HMRC before the end of the current financial year.’ Till then, SMEs will just have to grin and bear it.
Seems as though tax does have to be taxing after all…