The inspectors can now turn up at people’s homes or businesses unannounced and examine their records if they believe not enough tax has been paid.
The news comes at the end of a week in which HM Revenue & Customs was accused of incompetence because of failings in the ‘pay-as-you-earn’ (PAYE) system. About 1.4 million people are now facing tax demands because of HMRC errors.
The scale of the new powers for tax inspectors, which were first introduced last year under the Finance Act 2008, have only become apparent after HMRC started to publish redacted versions of their training manuals on the internet.
Gary Ashford, head of tax risk, disputes and investigations at accountancy firm RSM Tenon, said that the powers under civil law made them inspectors more powerful than the police.
So far hundreds of people are thought to have been subject to the intrusive unannounced checks.
The powers are likely to be targeted at people who run businesses, but can also be targeted at anyone who works from home or has a portfolio of rental properties through buy-to-let mortgages.
Mr Ashford said: "It is not about avoidance or evasion, it is if a tax inspector wants to satisfy himself if someone is paying the right tax. It can be a business or individual – any taxpayer.
"These powers amount to the biggest change in between 30 and 40 years in the way that HMRC does its business. These significant changes have been introduced and the public doesn’t know about them."
September 17, 2010
