Anger as HMRC clamps down on small firms but lets big businesses off the hook

 

HMRC has piloted the scheme in eight areas, examining small firms' proof of expenses and income dating back years. If the scheme goes ahead, companies with sub-standard records may face up to £3,000 in penalties, which business groups warn could drive many struggling businesses to insolvency. 

 

John Walker, national chairman of the Federation of Small Businesses said: "Despite the worsening economy, HMRC is launching this scheme regardless of the consequences."

 

"We have spoken to HMRC and expressed our concerns about this a number of times. But as far as they and ministers are concerned it is a policy aim to make this happen. There is a huge difference between the rhetoric of the government about helping small businesses and what it is doing in reality," he added. 

 

Conservative backbenchers also slammed the scheme following the government department's controversial "sweetheart deals" with Vodafone and Goldman Sachs, as revealed in the recent House of Common's Public Accounts Committee report. HMRC let Vodafone settle a long-running dispute by paying £1.25bn but the tax bill should have been £6bn or more, according to the report. 

 

Priti Patel, the Conservative MP for Witham, said: "This is the persecution of small businesses at a time when they are already facing a very, very hard time.

 

"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," she added. 

 

Fellow Tory backbencher Anne-Marie Morris said: "There used to be a different ethos at HMRC where they would look on minor errors sympathetically, but that appears to no longer be the case and very small businesses are being treated in the same way as larger ones with better resources."

 

 

A Revenue spokesperson said: "Following consultation with representative bodies, HMRC has started a detailed review of the business records checks 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," they added.

 

The department is expected to unveil the findings of the review later this month and final decisions regarding the scheme will be made before the end of the current financial year.