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HMRC’s own research suggests aggressiveness in tax investigations is unjustified
2nd February, 2010
- Just 4% of taxpayers are real tax evaders, says HMRC research
- Too complex tax system biggest reason for non compliance
New research commissioned by HM Revenue & Customs found that just 4% of taxpayers are likely to be deliberate tax dodgers whist the vast majority (83%) of those who are aware of their tax obligations are willing to comply. This suggests that HMRC’s increasingly aggressive stance in its investigations cannot be justified, says UHY Hacker Young, the national accountancy group.
HMRC’s research also reveals that that over one in five (26%) taxpayers fail to meet their tax liabilities because they don’t understand the tax system well enough or are unaware of their obligations – a much higher proportion than that of actual tax evaders.
UHY Hacker Young says that with such a small percentage of taxpayers being active tax evaders, HMRC’s growing aggressiveness towards business owners and individual taxpayers during its tax investigations is completely disproportionate.
Comments Clive Gawthorpe, Tax Partner at UHY Hacker Young: “From the many tax investigations that we have seen HMRC’s attitude seems to be that most business owners or taxpayers are guilty of non compliance until they can prove their innocence. These figures show that such level of suspicion is widely unfounded.”
“Many taxpayers who are not compliant struggle because the tax system is overly complicated. They are genuinely confused.”
“The Chancellor makes a spider web of tax changes every year, adding and abolishing taxes and tax discounts while moving tax bands, sometimes reverting to the system in place before. This constant tinkering is making the tax system ever more complex, which means that it is increasingly difficult for taxpayers to complete returns without professional advice.”
UHY Hacker Young says that the last few years have seen the emergence of a long line of Government initiatives to give HMRC potentially draconian police like powers.
For example, since April 1 2009 tax inspectors, in certain cases, have the right to raid residential homes to investigate business records without warning. In July 2009 HMRC looked to obtain powers to be able to routinely ask all companies for data on their trading partners in order to target them for investigation.
Clive Gawthorpe states, “Some of these powers require, for example, that businesses collect information on their suppliers, resulting in significant costs. At a time when many companies are strapped for cash this seems completely disproportionate in view of the actual risk presented by a very small number of potential tax evaders.”
