Warning as HMRC spreads its tax avoidance net wider

HM REVENUE & Customs is to target a wider range of individuals and businesses as it seeks to raise more funds from tax evasion clampdowns, a leading tax expert has warned.

The tax office has adopted a tougher approach to tackling avoidance over the last year, targeting offshore account holders and medical professionals in separate tax amnesty initiatives. Now it is expected to turn its attention to other individuals and businesses as the government attempts to bolster tax revenues, according to Neil Whyte, tax partner at PKF accountants and business advisers.

Whyte said it was part of a new "thought process" at HMRC as the historically more aggressive Customs & Excise culture takes precedence over the more reactive approach of the old Inland Revenue.

"There has been a dramatic drive to increase the tax take from the general tax-paying public over the last six to 12 months," said Whyte. "It started with offshore accounts, then medical professionals, and accountants and lawyers are likely to be next. HMRC is not fussy where it gets the tax from."

Earlier this year HMRC launched an amnesty aimed at persuading medical professionals to declare any understated or undisclosed tax liabilities.

Under the Tax Health Plan, medical professionals such as doctors and dentists have until 30 June to calculate and pay any liabilities due.

The measures are built on similar initiatives targeting offshore tax evasion, including the New Disclosure Opportunity launched last summer to persuade taxpayers to divulge details of offshore investment.

Whyte also warned that individual tax affairs would need to be handled more cautiously as the HMRC penalty regime becomes increasingly harsh: "We are moving towards 200 per cent for certain penalties where it would previously have been 100 per cent. There is also a drive to enforce that collection retrospectively."

And Whyte advised business owners to take the threat of tax action more seriously as HMRC steps up its activities, saying: "The knock on the door from HMRC is now a real business risk, not a perceived risk."