ICAS have put a very well aimed and targeted boot into the "delicates" of HMRC, in respect of HMRC's Impact Assessment of Business Record Checks.
ICAS are of the view that business records checks could cost SMEs at least 10 times more than HMRC's guesstimate, and will impose an absurd administrative burden on SMEs.
In HMRC's fantasy land each visit, averaging half a day, will cost a business £54. However, ICAS has re-costed an average visit using realistic estimates of business disruption and adviser's time and have come up with a total of at least £560 per visit.
ICAS is also somewhat wary of HMRC's fantasy plans to visit 50,000 SMEs each year for four years.
That would be most assuredly bureaucratic bullying overkill, if HMRC really had the resources to do that. Additionally, ICAS is not particularly impressed with the "quality" of some of the people HMRC will be sending into the field and is concerned about the "intransigent attitudes" of these inspectors.
"..the bases on which these proposals have been presented seem deeply flawed.
Assumptions made by HMRC regarding the incidence of inadequate business records are unsubstantiated by any detail, and estimated costs of the scheme are massively understated. It was not long ago that HMRC were assuring the Administrative Burdens Advisory Board that interventions would be well targeted to reduce red tape for compliant taxpayers, and we fail to understand why this policy has been changed...
HMRC's basic assertion that poor business record keeping is responsible for a loss of tax in up to 2 million SME cases annually seems to be a sweeping generalisation with little credible evidence provided to back it up. We would like to see evidence as to how this statistic has been arrived at, as the validity of the entire consultation document is based on it. Without such evidence, the proposals might appear burdensome and unjustified.
Experience of our members in practice suggests that poor record keeping (where it arises) does not necessarily equate with loss of tax – it can sometimes result in their clients paying too much tax...
We would take issue with HMRC's basic assumption that SMEs with poor records have chosen to have poor records. This is a misconception. Those with the courage and tenacity to embark on new business ventures are forced to battle from the outset against a mass of Government regulation and red tape. Typically they don't go into business because of their record keeping skills...
Anecdotal evidence has caused our members to question the skills and professional judgement of some HMRC representatives checking the business records of their clients. We understand that many of these members of staff have no significant accountancy or tax training. This can cause them to be on the defensive, and in these circumstances it is not unknown for them to adopt intransigent attitudes..."
As we can see, an unelected inefficient bureaucracy is allowing the excessive powers granted to it by a weak and incompetent political establishment to go to its head; and is attempting to use these powers to bully people and organisations that pay for its very existence.
Tax does have to be taxing.
UK EXPATS: Reduce tax on UK Pensions
HMRC QROPS provider. Unlock your UK pension and access a 25% lump sum today.
Quote ID code "ABC" when contacting a QROPS specialist.
Professional Cover Against the Threat of Costly TAX and VAT Investigations
What is TAXWISE?
TAXWISE is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.
To find out more, please use this link Taxwise
Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.
Click the link to read about: Tax Investigation for Dummies