Lawyers and accountants have rounded on HM Revenue & Customs over proposals for a tax-dodging amnesty and toughening rules on how struggling companies offset their losses.
Last week HMRC mooted a new disclosure regime to encourage tax evaders to come forward without the threat of criminal charges. However, the consultation suggested a deadline of 60 days for miscreants to reveal how much tax they have withheld, with the possibility that they will be prosecuted if HMRC ultimately discovers that they have underestimated the total that should have been paid. McGrigors, a law firm specialising in tax matters, warned that the tight deadline was a "recipe for mistakes" and "60 days is too short a timeframe in which to ask somebody to make such an important disclosure".
Another HMRC plan, to change how companies offset losses against tax, has brought criticism from accountants. HMRC is proposing that repayment for losses of more than £25,000 will have to be vetted beforehand, as opposed to the current regime where taxpayers simply adjust their self-assessment returns.
UHY Hacker Young, an accountancy group, said the move could endanger businesses. "Struggling businesses can hardly afford to pay tax and wait for the refund. These proposals will cause serious cashflow problems for a huge number of legitimate businesses and some will probably go to the wall as a result," said Roy Maugham, a UHY partner.
An HMRC spokesman said the measures were the subject of consultations.
He said: the tax losses rules "aim to explore ways of ensuring that genuine business and employment losses are relieved, while deterring tax avoidance at the outset."
