HMRC turns to aggressive tactics to target accountants

HMRC has been accused of targeting accountants with “aggressive” letters, without any evidence

A City law firm, RPC, claims that the Revenue is writing to traditional high street accountants, implying they are helping clients avoid tax, without offering evidence in support.

According to RPC, the letters imply that if accountants do not respond to the letter, they could be included in an HMRC “program of work”, looking at the tax avoidance industry.

Adam Craggs, partner and head of tax disputes at RPC, said that the pressure the Revenue is facing to improve the tax yield is encouraging it to “push the boundaries” of its powers.

He said, “HMRC is essentially suggesting that these smaller accountancy firms are guilty of encouraging tax avoidance without producing any evidence whatsoever. The aggressive approach towards high street accountants is indicative of HMRC resorting to ever more desperate measures in their efforts to bring in more tax for the chancellor.”

In a statement, HMRC said the letters were part of a routine series of communications to “a limited number” of agents who are recorded as having a client who has been a member of a tax avoidance scheme in the past.

The spokesperson said, “These letters serve to educate agents about the new Promoters of Tax Avoidance Scheme (POTAS) regime and encourages them to get in touch, and to clarify the extent to which they are involved in advising their clients on tax avoidance risk.

“We know from experience, many people who get involved with tax avoidance schemes later regret the time and cost of disentangling themselves. We’d rather agents advised their clients in a way that prevents their engagement in tax avoidance in the first place.”