HMRC’S ‘no mercy’ approach nets £40bn

HMRC has ‘clawed in’ an extra £40bn from businesses and has sought increasingly intrusive powers since it was created in April 2005, according to a Birmingham accountancy firm.

During its first year, the taxman brought in £7.4bn through investigation work, however since then it has employed a ‘no mercy’ approach, says city accountants UHY Hacker Young.

This aggressive approach has led to a 64% jump in the money it has raised so in the last financial year HMRC uncovered £12.6bn, mostly from large businesses.

Overall, HMRC has brought in £39.5bn through investigations, however it has achieved this through ever more intrusive techniques, UHY Hacker Young warns.

“The amount of money that HMRC is taking in through compliance work is huge but this hasn’t come without significant costs to innocent taxpayers,” says Malcolm Winston, a partner at UHY Hacker Young.

“HMRC has continuously sought tougher and more intrusive powers, such as the power to make arrests, to enter business premises unannounced and to demand confidential information on taxpayers from third parties.”

Mr Winston also says taxpayers are increasingly being caught out as the tax system becomes ever more complex and innocent parties are finding themselves on the wrong side of the law.

He says businesses should be concerned about the taxman’s ‘draconian powers’ which are similar to those used by Customs to deal with criminals.

“Since HMRC’s formation the Inland Revenue side of the department has been lobbying to gain the draconian powers that Customs have to deal with the threat of drug smugglers and arms dealers.

“The result is that HMRC now has sweeping powers to enter business premises to conduct a search without warning beforehand and to make arrests without the need to be accompanied by a police officer.”