Midlands accountants Reynolds and Co has accused HM Revenue & Customs of ‘big brother’ tactics because of a new consultation document released by the body that would give it unprecedented new powers to demand trading information from companies.
The new document – Modernising Powers, Deterrents and Safeguards – is the latest bid to increase surveillance on the Midlands and UK business community.
Under the current rules, HMRC can ask banks and estate agents for information about their customers to help in the pursuit of tax evaders.
But as part of the new consultation, HMRC is proposing that all businesses be required to disclose information on people that trade with them. If successful, it will force businesses to disclose customers’ details to help it identify and prevent tax evasion.
The Birmingham-based accountancy specialist said it believes the HMRC application to access this ‘power’ is a step too far.
Nigel Reynolds, the principal and founder of Reynolds and Co, said: “The taxman has extensive powers of investigation yet they are still not happy.
“With these additional powers, the HMRC will be able to build a database of unprecedented size and power about Midlands and UK citizens and businesses.
“Quite apart from the fact that this is a ‘big brother’ tactic, it will also put an enormous burden on small and medium-sized businesses since they will not have the systems or resources to enable them to comply with such requests.
“This really is taking regulation one step too far. The Government have said in the past that they are trying to reduce the administration burden on small businesses – this possible extension in powers shows no regard for this promise.”
The proposed initiative could see businesses who fail to comply with the regime being fined up to £300 or more, plus an additional daily penalty of £60.
“It is also topical that although the HMRC are requesting such additional powers,” added Mr Reynolds. “They make no mention during this plea of the fact there are up to £5 billion in overpaid taxes and unclaimed reliefs, which they say will only be dealt with at the request of the taxpayer.”
This follows the HMRC recent move of issuing disclosure notices to 300 UK banks asking them for details of their UK customers with offshore accounts.
Reynolds and Co specialises in accountancy (including Solicitors’ Accounts Rules), taxation and business advisory services. This includes management and business services, business start-up support, tax management, IT support and payroll and book-keeping services.
The firm is also a member of the ACCA, the largest global body for professional accountants – with 131,500 members of the accredited body across the world.
The HMRC consultation is part of an ongoing re-evaluation of the way the organisation works. One major part of the reorganisation this year involves looking at changing the way HMRC publishes the details of companies that default on tax.
Because civil penalties are currently charged by tax authorities instead of through the courts, as in some other countries, there is no automatic publication of cases.