The Inland Revenue has come under attack for sending out letters to small businesses, suggesting that their tax returns maybe incorrect.
The decision has panicked many small business owners unnecessarily and has led to major criticism from the Federation of Small Businesses, who have called on Gordon Brown to issue an apology.
The so-called ‘enabling letters’ state that entrepreneurs need to pay more attention to the self-employment aspects of the form.
Computer software at the Inland Revenue is designed to identify certain triggers that could be an error in the individual tax return. If an error is detected, an automatic mail-shot is sent to the taxpayer.
However, the FSB claims that many business owners believe this is merely a way for the Inland Revenue to investigate their financial activities.
The FSB’s Tax Chairman, Neil Hamper, said: “The letters are a complete disgrace. They are vague and misleading. They suggest that a specific problem has been identified when in fact the letters have been generated by computers on the basis of standard triggers.”
In responce, the Inland Revenue has stated that the letters were simply meant to guide people completing the form correctly and in no way were any mistakes made in the processing of such notices.
A spokesperson for the Inland Revenue commented on the nature of the letter. He said, “We know from the results of our self assessment enquiries that there are some common errors made by many people and sometimes find that customers claim for expenses to which they are not entitled.
“By offering advice on these issues in the letters, we hope to help them to complete future returns accurately and with confidence.”
However, the FSB are adamant that it’s the people who have ticked the right boxes that are being wrongly targeted.
“It’s a case of lets shake the tree and see what falls out. We have written to Gordon Brown to express our concern and to urge him to ensure the Inland Revenue sets the record straight.”
