Spot Checks

The New Year is upon us, and already HMRC has been flayed by certain MPs and the Federation of Small Business (FSB) for harassing small businesses.

The cause of the outpouring of ire are the plans drawn up by HMRC for conducting spot checks on the paperwork, going back several years, of up to 20,000 firms as from April.

Ironically, as per an article I wrote in September, the original target was 50,000:

"HMRC have reduced their target for checking business records down from 50,000 to 20,000.

However, for reasons best known to HMRC, they are describing this reduced target as an "extension" of the scheme.

For good measure they also claim that the record checks are in the businesses best interests .."

Anyhoo, 20,000 or 50,000, failure to provide HMRC with the information that they require may give rise to a fine of up to £3K.

John Walker, national chairman of the FSB, is quoted by The Independent:

"Despite the worsening economy, HMRC is launching this scheme regardless of the consequences.

We have spoken to HMRC and expressed our concerns about this a number of times. But as far as they and ministers are concerned it is a policy aim to make this happen.

There is a huge difference between the rhetoric of the Government about helping small businesses and what it is doing in reality."


Priti Patel MP is quoted:

"This is the persecution of small businesses at a time when they are already facing a very, very hard time. The attitude of HMRC to small businesses is frankly disgraceful when they are blatantly doing deals with large firms which have allowed them to escape millions of pounds in tax liabilities."

Interestingly, according to a spokesman,  HMRC appear to be backtracking on the plans:

"HMRC recognises that the launch of the Business Records Checks pilots has caused considerable concern to the tax profession, and that the project would have benefited from more detailed consultation with tax professionals at an earlier stage. 

In the light of these concerns, HMRC will undertake a strategic review of the project, in consultation with the professional and representative bodies.

The findings of the review will be shared with representative bodies in January 2012, and final decisions will be made by HMRC before the end of the current financial year."

Let us see if that gets anywhere.

Notwithstanding the above, the politicians would do well to remember that as they are responsible for tax legislation, HMRC's budget and the senior appointments to HMRC, they are ultimately responsible for HMRC.

Tax does have to be taxing.

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