HMRC is now seeking the right to appear at your home office and make an unannounced inspection of your tax records. All home businesses are liable, regardless of their status.
This demand is part of an extensive request for new ''powers that HMRC is making under the 2008 Finance Bill. It's not yet clear if they will get them or not--we'll have to see how debate will go in the House, because this is not a part of the Finance Bill that goes through more or less automatically--but if it is approved, you will find them at your door.
No Proof Required
What is particularly ominous in this bid for lightning inspections, is that HMRC doesn't need any proof that you are doing wrong in order to make them. There is not, as with the police for example, any obligation to show that there is reason for suspicion or that you have some involvement in an investigation before they turn up with their little clipboards.
''It's scary, and entirely unnecessary,'' says Bill Dodwell, a tax partner with the consulting firm Deloitte in London.
It's scary, and entirely unnecessary
Bill Dodwell-Deloitte
Here's how a spokesperson for HMRC puts it: ''The aim of the Powers Review is to align and modernise the powers and taxpayer safeguards that HMRC inherited from Customs & Excise and the Inland Revenue. The intention is to provide greater consistency and alignment of our access to records and information.''
We're All Tax Dodgers, Right?
According to HMRC, we're all basically tax dodgers, and so we have no civil rights. HMRC claims in a report, that 41 billion pound per year is lost through tax evasion. This translates to a cost of more than 1,600 each to every household in Britain, according to HMRC calculations.
But If We Evade Taxes Successfully, How Do They Know?
A spokesperson for HMRC declined to explain the basis of the 41 billion pound calculation. We asked, then, how they knew people were evading taxes? But if people are evading taxes, and they don't know about it, how do they know they're losing 41 billion pounds each year? And if they know about the evasion, why don't they stop it?
A Great Change In Store?
No clear answer to any of this. But the right to invade our homes at whim will change everything, as far as HMRC is concerned. Under current law--imagine!--At present, HMRC must open an inquiry into a company or person and then give 24 hours’ notice of a visit. Surely we tax dodgers will lose our ability to throw together six years' worth of tax records in one day thanks to this new rule?
As several tax experts point out, what HMRC really wants to do is to catch us without any representation. If they show up and our accountant or tax lawyer isn't handy--and mine generally doesn't work on a real-time on-demand basis--I don't know about yours--they can ask all sorts of questions and tie us up in knots.
While there is an appreciation that HMRC needs adequate powers to ensure compliance, business is concerned to ensure these powers would be used proportionately with proper oversight
Paul Harrison-KPMG
Paul Harrison, tax partner at the London-based consulting firm KPMG puts it in a nutshell: ''While there is an appreciation that HMRC needs adequate powers to ensure compliance, business is concerned to ensure these powers would be used proportionately with proper oversight.''
Published: Wednesday, March 19, 2008
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