SME trials spark backlash against tax man

HMRC (Her Majesty’s Revenue and Customs) has come under fire from some tax advisors as it starts the trials planned in a new clamp down on the bad records which are being kept by some SME’s, (small and medium sized enterprises).

The HMRC is of the opinion that some small enterprises vastly need to improve on their record keeping and approximately 1200 SME’s are the initial targets in the programme. The aim of this programme is to check the records of 200,000 SME’s over a four-year period, and hopefully raising £600m for the Exchequer at the same time.

The visits had always been scheduled to start in July but HMRC then decided last month to begin what it described as a ‘test and learn’ trial. This was to determine that the criteria tax inspectors are fully versed in what they are looking for in the records to identify errors and spot where tax has been underpaid.

CIOT (Chartered Institute of Taxation) has protested strongly about their lack of consultation over these trials. The protest has been so strong that HMRC has been forced to amend a letter it sent to the targeted enterprises clarifying the basis of the trials.

The Deputy President of CIOT, Anthony Thomas, has publicly accused HMRC of purposefully starting the programme early and of tackling the problem of inaccurate record keeping in completely the wrong way. He is of the opinion that HMRC should have involved tax advisors in the education of SME’s regarding record keeping.