So, it seems that having failed to fulfil its obligations, with its staff numbers decimated, and with politicians baying for the blood of individual taxpayers, HMRC has nothing left in its armoury but to resort to scare tactics.
And thus we learn that the taxman is piloting a new scheme – using terror tactics to scare those engaged in legal activities into stumping up more than they legally have to.
HMRC is writing to 1,500 taxpayers in an as yet undisclosed tax avoidance scheme, but one which is currently perfectly legal, and threatening to investigate them unless they immediately exit the scheme and pay any additional tax resulting from the scheme’s use.
The campaign, revealed in a report by the BBC’s Kevin Peachey, is “the first of its kind” and “a pre-emptive strike before the scheme’s legality is challenged.”
According to Peachey, one version of the letters he has seen says:
“You are in the small minority of people who have made the deliberate choice to avoid tax. We focus our resources on this small minority. The choice that you have made changes the way we view your tax affairs. Our Specialist Investigations Unit will be carrying out a full investigation into this scheme and they will open an enquiry into your tax affairs.”
The letter then suggests that, as a user of the scheme, the recipient may have to pay additional tax, interest and possibly a penalty. It also helpfully “provides payment details for people if they wish to pull out of the scheme immediately and pay up”. And if that weren’t chilling enough, the taxman goes on to threaten long, drawn out court battles that will “lead to years of uncertainty about your tax affairs”.
That’s what is potentially so contentious about HMRC’s behaviour, the fact that taxpayers are being threatened with an investigation unless they ‘voluntarily’ pay more tax than the law currently requires of them.
The scheme is legal and will continue to be legal until legislation is created that makes it otherwise. If the scheme’s users continue to reduce their tax liability after that point, then that’s when HMRC can take action. But doing so beforehand is contemptible, and goes against natural justice.
It’s like the police threatening to pull over and fine motorists travelling at 70 miles per hour on the motorway because there might be a chance that at some point in the future the law will change and the speed limit will be reduced to 60 miles per hour.
Furthermore, by issuing these letters with the emotive and aggressive language they contain – eg “paying your taxes is the right thing to do” – it seems HMRC has taken upon itself the role of the nation’s moral arbiter. That is simply not its job.
And HMRC is potentially killing off perfectly legal businesses and business ventures on a whim, before those business models are tested in the courts. That’s outrageous.
This is a sad and desperate business. But then when you've had the guts pulled out of your organisation in terms of staff numbers, your senior investigators are all about to retire, and your politician overlords want to feed the media a line that they're serious about ‘immoral’ tax avoidance, perhaps scare-mongering is all that's left to HMRC.