Businesses that play by the rules risk being caught up in ‘friendly fire’ resulting from a hard line approach to tax evaders by HM Revenue & Customs (HMRC).
The claim, from Dorset and New Forest chartered accountants (PcW), follows the news that HMRC clawed back a record £21 billion from tax avoiders and evaders in the year to March 31.
Compliance investigations into avoidance netted 31 per cent more than the previous 12 months when £16 billion was recouped.
Tough new targets, coupled with an extra 2,500 investigators, tax inspectors and VAT officers and an increased penalty regime, are expected to see even more billions of pounds being recovered in future years.
John Caithness, PcW’s Business Tax Director, said no-one wanted to see tax evaders escape paying their legitimate dues.
But, he added: “When targets are set it is not always the real target that is hit.
“In our experience many local businesses will get caught up in what can best be described as friendly fire.
“HMRC’s hard-line approach will mean that compliant businesses who play by the rules will also become embroiled in its drive to meet aggressive recovery targets.
“They will come under pressure from HMRC because of its hard line. Even if they rebuff HMRC they will suffer severe disruptions, incur fees and possibly suffer sleepless nights.”
John said clients were increasingly reporting HMRC investigators ‘turning up the heat’ in order to meet exacting targets.
“There is a spin off from the new HMRC targets. They have a new hard line approach to tax collection that will mean even compliant businesses are no longer immune from the rigours and costs of a HMRC review,” he added.
John said PcW was seeing a rise in the number of clients choosing to take its fee protection insurance as a direct result of the HMRC crackdown.
“Being investigated by HMRC can be a distressing, disruptive and intrusive experience. It can also be very expensive as investigators frequently go on for several months.
“PcW’s tax investigation fee protection scheme covers all our professional fees resulting from any HMRC investigation or PAYE, NIC and VAT dispute. Increasingly clients are taking it in order to secure peace of mind,” John added.
