Tax man ‘targets self-employed, turns blind eye to super-rich’

M Revenue & Customs spends too much time and effort chasing self-employed people and not enough chasing multi-millionaire tax evaders, a body representing independent professionals claims.

The Association of Independent Professionals and the Self Employed (IPSE) was responding to a feature on Radio 4’s Today programme, which considered how HMRC investigates small businesses. It pointed to the infamous Arctic Systems tax case, in which a husband and wife team drew income in the form of dividends on profits, rather than salaries, so they would pay less personal tax.

The case went to the High Court, where HMRC lawyers argued Geoff Jones, who did most of the work in the business, drew an “inadequate” salary, thereby inflating the companies “reserves” and allowing payment of “excess” dividends up to the tax-free threshold. Corporation Tax Money paid in the form of dividends has already been subject to corporation tax and VAT, while salaries pegged at the income tax-free threshold nevertheless attract national insurance contributions.

Simon McVicker, director of policy and external affairs at IPSE, said the avid pursuit of sole traders and micro-businesses was a distraction from the really big tax cases involving multi-national corporations.

This, he said, hindered economic growth because of the significant financial contribution made by self-employed people. “The way HMRC are fiercely pursuing independent professionals while turning a blind eye to tax avoidance tactics by big business is completely unfair and is stifling the important work of microbusinesses up and down the country, which will in turn affect economic growth.

“Tax avoidance on all levels is wrong, but in light of the recent HSBC allegations, HMRC are picking on innocent individuals while big business are getting away with wrongdoing lightly. One of IPSE’s top priorities is to support microbusinesses who are being unfairly treated by HMRC.”

Responding to a report this morning on Radio 4’s Today Programme, IPSE, the Association of Independent Professionals and the Self Employed, has said tax collectors are unfairly targeting microbusinesses, while turning a blind eye to avoidance by bigger businesses and the wealthy elite. The programme highlighted the famous Artic Systems case, in which company director Geoff Jones had a three year battle with HMRC. IPSE funded that high-profile case which ended at the House of Lords and resulted in a historic win for the taxpayer.

IPSE continues to provide funding for its members who are unfortunate enough to be investigated. IPSE believes microbusinesses are an easy target for HMRC which is “stifling” the work of independent professionals across the country. The calls from IPSE come following allegations that HMRC are not going far enough to prosecute wealthy individuals such as those involved in the HSBC scandal.

Simon McVicker, Director of Policy and External Affairs at IPSE, said: “The way HMRC are fiercely pursuing independent professionals while turning a blind eye to tax avoidance tactics by big business is completely unfair and is stifling the important work of microbusinesses up and down the country, which will in turn affect economic growth. “Tax avoidance on all levels is wrong, but in light of the recent HSBC allegations, HMRC are picking on innocent individuals while big business are getting away with wrongdoing lightly. One of IPSE’s top priorities is to support microbusinesses who are being unfairly treated by HMRC.”