Oliver Wright: Struggling entrepreneurs feel betrayed by HMRC's heavy-handed crackdown

Many small companies are struggling to stay afloat, let alone having the money to spend on an accountant

Share
Related Topics

When George Osborne announced plans in his 2010 spending review to give Her Majesty's Revenue and Customs an extra £900m over four years to "address the tax gap and tackle tax avoidance and evasion" the move was widely welcomed.

The Treasury predicted it would raise an extra £7bn a year in tax revenues by 2015 which could be offset against what were already very harsh public sector spending cuts. Mr Osborne trumpeted the move as a break from the last Labour government "where the gap between the taxes owed and the taxes paid grew considerably".

For HMRC, a key aspect of the plan was to tackle what they perceived to be the underpayment of tax by Britain's 4.8 million small and medium-sized enterprises – which they calculated accounted for up to 50 per cent of the "lost" tax revenues.

They announced plans to roll out a programme of "business record checks" targeting thousands of small business for spot checks, assessing their paperwork for inconsistencies, with the power to fine those companies not up to scratch.

Pilot schemes were set up and from this year the plan was to roll it out nationally. But, 15 months on, the scheme is fast unravelling. For a start, the economic situation has deteriorated sharply from what the Government was predicting in 2010. Many of these companies are struggling to stay afloat, let alone having the money to spend on an accountant to ensure their records meet the required standards. If they try to do it themselves, they not only risk getting it wrong but, as the Federation of Small Businesses points out, they lose valuable trading time when they could be selling to customers.

There is also a strong suspicion that HMRC is applying double standards – going after businesses that don't have armies of lawyers and accountants who can tie them up in knots for months or years.

The revelations, in the past year or so, that HMRC allowed Goldman Sachs and Vodafone to pay millions of pounds less in tax than they believed they owed has added to these concerns.

The plans have also gone down very badly with Conservative backbenchers. Many have already had their ear bent by local businessmen in their constituencies who complain that Government promises on cutting red tape for small businesses have not be fulfilled. The idea that HMRC is planning to add to their burdens has gone down very badly.

Yesterday HMRC said it was conducting a "detailed review" of the plans. Given that they held a two-month consultation at the start of last year – and decided to plough on regardless – the new review suggests that powerful voices are now aligned against them.

For small businesses, that review can't come soon enough.

React Now

  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Recruitment Genius: Junior Web Designer - Client Liaison

£6 per hour: Recruitment Genius: This is an exciting opportunity to join a gro...

Recruitment Genius: Service Delivery Manager

Negotiable: Recruitment Genius: A Service Delivery Manager is required to join...

Recruitment Genius: Massage Therapist / Sports Therapist

£12000 - £24000 per annum: Recruitment Genius: A opportunity has arisen for a ...

Ashdown Group: Practice Accountant - Bournemouth - £38,000

£32000 - £38000 per annum: Ashdown Group: A successful accountancy practice in...

Day In a Page

Read Next
Ed Miliband and David Cameron  

Cameron and Miliband should have faith in their bolder policies

Ian Birrell
Andreas Lubitz runs the Airport Race half marathon in Hamburg on 13 September 2009  

Being sensitive to mental health need not lead us to downplay the horror of what Lubitz did

Will Gore
Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat
Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

Saudi airstrikes are fuelling the Gulf's fire

Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

The only direction Zayn could go

We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

Spells like teen spirit

A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

If fashion is a cycle, this young man knows just how to ride it

British designer Jonathan Anderson is putting his stamp on venerable house Loewe
Number plates scheme could provide a licence to offend in the land of the free

Licence to offend in the land of the free

Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

From farm to fork in Cornwall

One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

Robert Parker interview

The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
Don't believe the stereotype - or should you?

Don't believe the stereotype - or should you?

We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor
How to make your own Easter egg: Willie Harcourt-Cooze shares his chocolate recipes

How to make your own Easter egg

Willie Harcourt-Cooze talks about his love affair with 'cacao' - and creates an Easter egg especially for The Independent on Sunday
Bill Granger recipes: Our chef declares barbecue season open with his twist on a tradtional Easter Sunday lamb lunch

Bill Granger's twist on Easter Sunday lunch

Next weekend, our chef plans to return to his Aussie roots by firing up the barbecue
Joe Marler: 'It's the way I think the game should be played'

Joe Marler: 'It's the way I think the game should be played'

The England prop relives the highs and lows of last Saturday's remarkable afternoon of Six Nations rugby
Cricket World Cup 2015: Has the success of the tournament spelt the end for Test matches?

Cricket World Cup 2015

Has the success of the tournament spelt the end for Test matches?
The Last Word: Justin Gatlin knows the price of everything, the value of nothing

Michael Calvin's Last Word

Justin Gatlin knows the price of everything, the value of nothing