HMRC accused of harassing small businesses

(PA)

Tax officials were last night accused of double standards over plans to target thousands of small businesses for spot checks on their paperwork – despite letting big companies like Goldman Sachs off millions of pounds in tax.

Officials from HM Revenue and Customs with powers to fine small businesses plan to inspect up to 20,000 firms from April to see if they have adequate proof of expenses and income dating back years. Under the plans, up to 20,000 small businesses will face spot checks on their record keeping.

Last night the move was condemned by Conservative backbenchers and business groups who warned it risked bankrupting some businesses and harming the economy.

"Despite the worsening economy, HMRC is launching this scheme regardless of the consequences," said John Walker, chairman of the Federation of Small Businesses. "There is a huge difference between the rhetoric of Government about helping small businesses and what it is doing in reality."

Priti Patel, the Conservative MP for Witham, said around 80 per cent of her constituents worked in small and medium-sized enterprises and she had dealt with numerous examples of what she described as "harassment" by HMRC. "The attitude of HMRC to small businesses is frankly disgraceful when it is doing deals with large firms which have allowed them to escape millions of pounds in tax liabilities."

Last night a spokesman for HMRC said the plans would be subject to a review following problems with the pilot project. "HMRC recognises that the pilots have caused considerable concern to the tax profession, and that the project would have benefited from more detailed consultation with tax professionals at an earlier stage. In the light of these concerns, HMRC will undertake a review of the project."