HMRC Investigators Target Restaurant Tax Dodgers
Small businesses are being investigated in the first of a series of HM Revenue & Customs (HMRC) taskforces aimed at tackling tax avoidance and fraud.
Independent restaurants in London are being investigated first with those in the North West and Scotland soon to follow. Nine other taskforces will start work investigating small businesses in the coming weeks as HMRC seeks to recoup an extra £7 billion each year from 2011/12 to 2014/15.
Targeted businesses may find all their records, including PAYE, corporation tax, VAT and income tax records, subject to scrutiny. Personal bank records and other personal records of business owners may also be demanded.
An HMRC spokesman refused to identify which sectors and regions were next, but said businesses which use transient or flexible employees and are cash-led are obvious targets. Undercover agents may be used.
“We get information from particular business sectors, from employees and from members of the public. This is not a random exercise. We have compliance teams, criminal investigators and a whole range of other officials at our disposal to get people to cough up their tax.”
The HMRC spokesman added that penalties for those found at fault vary and are largely dependent on the level of the business owner’s cooperation with investigators:
“The key thing is [that] our response is proportionate. The maximum penalty is double the amount of tax defrauded, but there may also be criminal prosecutions and prison sentences.”
Julian Dabek, tax partner at London-based accountants Westbury’s, said:
“Small businesses need to incur the expense of having good advisers. The [Inland] Revenue are getting more and more confrontational and are looking to extract what they think is due, rather than what the law thinks is due, prompted by the current economic state.”
The Government has made £900 million available to tackle tax avoidance, evasion and fraud over the current spending review period.