HMRC's tax blitz coins it in, and it's big business that pays
Beware big business -- her Majesty’s Revenue and Customs is on the warpath. New figures published this week by accountancy firm UHY Hacker Young estimate that corporation tax investigations into big businesses recovered an extra £12.6bn over the past four years, a 69% increase over the period.
HM Revenue & Customs has clawed in a total of £39.5 billion from tax investigation work since April 2005, the date when HM Customs & Excise and the Inland Revenue merged, the accountancy firm says. And the formidable force that is HMRC generated £7.4 billion through its tax enquiries and other compliance work in the first 12 months of its existence alone.
Overall the research suggests HMRC crackdowns raised an additional £40bn over the period up to March 2009, but by far the most lucrative for the exchequer were probes into big business where the overall rise reached a staggering 64%.
The figures certainly add clout to the beefed up agency’s ‘hard man’ image and no mercy approach to tax avoidance. And the increasingly blurred boundaries between tax avoidance and evasion (in the eyes of HMRC, at least) have no doubt helped dissuade many from even contemplating perfectly legitimate tax planning schemes.
Taking the moral high ground is all well and good, but when companies have done little more than invest in legitimate schemes that have been approved by the organisation that then turns around to demonise them, well it smacks of inconsistency at best and double standards at worse.
There’s a slightly sinister side to the clout being wielded by HMRC. Since it came into existence, HMRC has continuously sought tougher and more intrusive powers – from the power to make arrests, to enter business premises unannounced and to demand confidential information on taxpayers from third parties, even to make arrests without the need to be accompanied by a police officer.
UHY Hacker Young also believes the steep rise in extra tax acquired through compliance investigations is also partly a reflection of the increasing number of mistakes being made by often innocent taxpayers as the tax system grows ever more complicated.
Few would disagree that companies, just like individuals, should pay the right amount of tax. But therein lies the debate and it’s a humdinger of one at that. It’s no wonder that tax is an issue that lies at the heart of all the major parties’ manifestos; it’s a subject that’s guaranteed to divide a nation.