Member Article

?Get tough' tax policy poses new problems for companies

A new ‘get tough’ approach to tax enforcement is set to create serious problems for companies, according to North law firm Ward Hadaway.

Measures introduced in the Budget will make senior finance officers at larger businesses personally liable for companies’ tax affairs, with penalties of up to £5,000 levied on individuals for failing to meet the new obligations.

Tax experts at Ward Hadaway say the new rules, combined with other Budget plans to ‘name and shame’ people who evade tax of over £25,000, signal a much more aggressive approach from HM Revenue and Customs and could cause a major headache for the North’s biggest businesses.

Paul Christian, partner and head of tax at Ward Hadaway, said: “In recent years, HMRC has taken a more conciliatory approach towards corporate tax matters, but these changes demonstrate a definite ‘get tough’ attitude.

“Whether this has been prompted by the Government’s need to bolster tax revenues is unclear, but what this does spell is a real shift in policy.”

Under the new regime, senior accounting officers - probably a company’s finance director - of larger companies will be required to take personal responsibility to ensure that accounting systems are adequate for tax reporting purposes.

Failure to meet these obligations will see a fine of up to £5,000 directly imposed on the individual.

Paul Christian said: “This policy has wide-ranging implications for companies and senior finance people who work in them.

“It is likely to mean significant changes in internal accounting procedures and the introduction of new sets of checks and risk assessments, all of which will inevitably add to companies’ costs.

“Businesses which experience rapid growth will have to think quickly about how they are going to have to adapt to the new regime.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .