One of the numerous things which escaped the Budget 2014 headlines, but which will have a significant impact on a small section of small businesses, is the proposal to allow HMRC to directly access a business’s bank account to assess if that business has the ability to pay outstanding VAT and PAYE payments. If deemed that the company is capable, HMRC will have powers to take direct payment.
In what can only be described as draconian ‘big brother style’ state interference, this proposal will allow civil servant tax men and women to make decisions about a business’s ability to pay without any true understanding of how businesses are run, how cash flow is managed and how liquidity requirements within businesses change day by day, and sometimes even hour by hour.
What is even more preposterous is that this proposal will in the main affect the self-employed and small businesses only. Yes, remember, those businesses which are the engine room of the UK economy, the cohort of our business base which employs a greater proportion of workers, generally pays its tax liabilities on time and which isn’t resourced to implement tax avoidance mechanisms in the way some medium and, in particular, large companies do.
So the generally ethical and compliant smaller business is targeted – some might argue that it’s because they’re an easy target – while the bigger companies who go to great lengths to avoid having to charge and pay VAT via low-value consignment relief (LVCR) loopholes or avoid corporation tax by off-shoring offices despite obvious trading activity in the UK, get away with widely accepted unethical trading and taxpaying practices.
All political parties say they are the party for small business. The reality is that they fail, and have failed for decades, to focus attention on the larger businesses who are so often the regulatory abusers. These businesses rarely put sound ethics before the pursuit of profit and politicians rarely put the interests of small businesses before those of the largest.
The tide has to change and the Forum of Private Business will be fighting tooth and nail to ensure that our members and the wider small business community are protected from of overzealous tax inspectors who think they understand business.
This is one Orwellian-styled proposal which needs to be quickly consigned to Room 101.