I Bet You Missed This on April Fools Day

On 1st April 2009 new legislation came into effect which almost slipped in completely unnoticed because the current administration have become adept at slipping in legislation when they know nobody is paying attention.

What has been happening is that in the Budget (this year it's on April 22) they announce a raft of measures that are due to come in after the next financial year - this means that in the 2008 Budget there were items announced that come in after 31st March 2009 (the nominal end of the tax year for accounting purposes) which nobody took any notice of because its far more important in politically illiterate Britain to tell everybody how much extra a litre of petrol or packet of fags is going to cost rather than drawing anybody's attention to the small print. On Budget day Angela and myself spend hours going through every page of HMRC released press releases identifying what will go in this years budget report and noting what will impact the following year, it seems however that those in the national media rarely extend their interest beyond the highlights of the Chancellors speech and this time they missed a real biggie.

Of course now the 1st April has arrived it's made the press and everybody is getting excited, a bit like they did with the 10% Tax fiasco duh!

Schedule 36 of the Finance Act 2008 - no please stay with me this is important - came into force on 1st April. These are new powers of inspection and information gathering which are designed at helping HMRC conduct their enquiries "in a more focused, cohesive and, hopefully, quicker way."

The new power to enter business premises (please note business premises) for the purposes of inspection documents, premises or business assets has attracted much debate and attention, simply because our friend the 'Taxman' has never had the power before. Of course Customs officers along with company auditors have had this right for many years and no-one thought too much about it, to be honest so few directors read the Companies Act that I doubt they knew the bit about the auditors. HMRC’s senior management are saying, and they would wouldn't they, that they anticipate little use of this particular power and, where used, they expect it to be handled sensitively, discreetly and in a non-confrontational way.

Of course there are two important things to bear in mind here: firstly business premises can include private premises where business is conducted at home or the taxpayer claims use of home as office expenses on their tax return and secondly HMRC don't have enough officers to conduct 'lightning' strikes on unsuspecting taxpayers. But if they do decide to use these new powers there is something that needs to be considered, taxpayers may face a penalty of £300 plus £60 per day for refusing HMRC access.

So how does this fit with the idea that 'if you have nothing to hide why worry?' line of thought? Well it strikes me that this is a worrying development, if I have a client who is say thirty minutes drive away and he telephones me to say that HMRC have just arrived and want to enter his premises if he refuses entry on the grounds that he believes he should have his accountant present will he be find?