HMRC are under pressure, arguably like never before, to identify avoidance and seize disputed tax.

The question is whether the department’s efforts will be directed at large-scale institutional avoidance or at the low hanging fruit of individuals and SMEs that dispute they owe tax on legitimate and registered planning schemes that HMRC has decided to close.

The danger to these taxpayers is that the Revenue come after them first, to improve its figures and avoid further criticism from the likes of the Public Accounts Select Committee, but at the expense of going after larger scale issues that are highly complex and might take months or even years to resolve. This would be a travesty, particularly if HMRC use draconian new powers at their disposal to demand up-front payment of disputed tax without proving their case it court.

Accelerated payment notices (APNs) unreasonably place the burden of guilt – and proof – on the taxpayer. They have been extended to National Insurance contributions, raising concerns they could be applied to other areas of tax in the future.

APNs have the potential to bring SMEs to their knees and force individuals into bankruptcy by placing the burden of proof on them and making it exceptionally difficult to claim back mistakenly demanded tax

They are powers that are not only unloved by unwanted by the British population. A recent ComRes survey, commissioned by the Alliance for HMRC Accountability, found that 66% of Britons opposed the principle of HMRC being able to demand payment of disputed tax without taking the case through the courts. Only 16% felt the taxman should be able to demand tax without considering an individual’s self assessment or seeking a court judgment.

APNs allow HMRC to overstep what authority they should have and act as the arbiter of tax cases when the department has a clear financial motivation for demanding what it believes it is owed.

Make no mistake, HMRC regularly target the wrong people. Even if one chooses to accept the department’s claim that it wins 80% of tax cases (a figure that is highly debateable and for which requests for substantiation have been tellingly resisted), this would still mean that one in every five taxpayers is wrongly pursued by the Revenue.

The department would be further overstepping its authority if it attempted to use APNs to seize disputed tax in an effort to pull itself out of the firing line and claim success for improved performance.

The Revenue would be unfairly and unreasonably targeting individuals and SMEs, while ignoring systemic, high-profile, high-value avoidance. In short, it would do little to address the problem but leave small businesses and individuals in its wake in pursuit of quick wins.

Rather than picking on little guys who have quite reasonably undertaken tax-planning, HMRC should focus their energy and attention on institutional and large scale tax evasion. Anything to the contrary would be an abuse of power.

Ian Beech is a member of the Alliance for HMRC Accountability

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