TAXATION - E&Y and Coopers raided by Revenue
Raids on up to 80 companies as well as Big Six firms Ernst & Young and Coopers & Lybrand have signalled a massive crackdown on tax avoidance by the Inland Revenue.
Last Tuesday’s raids mean that in one blow the Revenue has shattered its cosy relationship with the UK’s leading accountancy firms, said experts, and confirm the crackdown on tax avoidance announced in the last two Budgets.
Most senior members of the Big Six’s tax investigation departments are former Revenue officers.
Highly co-ordinated Special Compliance Office busts shattered a long-held understanding that the leading accountancy firms were generally viewed as ‘safe’ from the Revenue’s intrusive glare when compared to smaller rivals.
But in an unprecedented move, the Revenue issued a series of search warrants using powers granted to it by Section 20c of the Taxes Management Act.
Papers and documents were seized from many of the offices raided.
Revenue officers from London, Birmingham, Bristol and Manchester are understood to have been hunting for evidence of a series of offshore invoicing schemes offering major tax savings to clients. Only E&Y, which developed the products, and Coopers are understood to have marketed the controversial schemes.
It is a clear indication, tax experts claimed, of Labour’s intention to banish ‘clever’ tax planning schemes.
One tax expert said: ‘This is unprecedented and a clear indication that there could be much more to come. It gets straight to the heart of what is avoidance, what is evasion and where is the dividing line.’
KPMG said it was contacting clients to check if they had been approached to join in similar schemes. ‘It is very disturbing that major firms have been affected by a section 20c investigation.’
A spokesman for E&Y confirmed that five offices had been targeted, but refused to reveal whether it had stopped offering the schemes. Coopers added that it was also co-operating with the Revenue.
