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HMRC 'becoming firmer with businesses'

22/01/14

The British taxman is becoming stricter with corporations in a bid to forestall public criticism over so-called 'sweetheart deals', meaning companies and their financial experts need to ensure they are performing well in their compliance duties.

An Oxford university study reported in the Financial Times found a widespread feeling among firms that HMRC has become considerably firmer since 2010, when the body came under fire for allowing Goldman Sachs not to pay interest in a tax dispute.

Roughly half of companies that have frequent disputes with the Revenue believe its approach has changed, according to preliminary findings from the Oxford University centre for business taxation.

This follows a similar report from law firm Clifford Chance, which pointed out HRMC has become "more aggressive" in its pursuit of companies that avoid tax.

Companies told Oxford researchers that tax officials are concerned that they will face criticism if they fail to carry out their role effectively.

"Because everyone within HMRC is afraid of being dragged before the [Public Accounts Committee] and Margaret Hodge, nobody is willing to overrule the specialists," one claimed.

Edward Troup, the Revenue tax assurance commissioner, told the Financial Times that it would be unfair to criticise the organisation for being overly harsh - he suggested that the regulator is instead simply following its remit closely.

However, he warned that the opposite criticism of 'cosiness' with businesses is also inaccurate, suggesting that a degree of closeness is necessary if HMRC is to enjoy a collaborative, mature relationship with the corporate world.

His view was shared by Will Morris, chair of the Confederation for British Industry's tax committee, who told the newspaper: "This new competitiveness is built on changes in the law, not any leniency on the part of HMRC."

Margaret Hodge, who chairs the Public Accounts Committee, warned last year that HMRC often loses its nerve when tasked with international tax avoidance.

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