Tax evaders targeted by HMRC

Date: 8th September 2008

HM Revenue and Customs (HMRC) has announced plans to sort out a backlog of over 1,000 tax evading small businesses and sole traders.

For the first time the department will rely on the services of City law firms to help deal with the evaders, the Times reported.

Previously, HMRC would normally make deals with tax evaders and let some of them pay a proportion of the full amount if they did so with a relatively small amount of fuss.

According to the Times, accountants are now worried that using City law firms to sort out such cases will prove "costly to the public purse".

Chris Oates, tax risk management partner at Ernst & Young, commented: "As a result of that policy change, more disputes now end up in court. It's no surprise that the Revenue's new litigious line is hitting its resources.

"The legal department is already under huge pressure and there have been concerns."

HMRC has issued a statement in an attempt to quash claims that there is a litigation backlog.

However, it is thought that firms such Slaughter and May, Linklaters, Clifford Chance, Allen & Overy and Freshfields will win business from the department in its hunt for evaders.