HM Revenue and Customs’ new plans to target tax-avoidance have been widely criticised by accountants and lawyers who specialise in tax matters.

The new proposals will give tax payers a 60-day period in which they to declare how much tax they may have withheld and be free from potential criminal prosecution. In addition, the proposals will toughen up how struggling companies offset their losses.

The tax-dodging amnesty has been criticised by tax law solicitors as being too short; 60 days is not long enough for a company to investigate and make the disclosure accurately.

If a company is ultimately discovered to have underestimated the amount of tax that should have been paid by HMRC, the company will face the possibility of being prosecuted. Solicitors therefore argue that companies must be allowed more time to make their estimation of withheld tax.

The law firm McGrigors, which specialises in tax matters, said the new disclosure regime was a “recipe for disaster”.

Accountants have criticised another proposal put forward by HMRC, this time concerning the repayment of losses by companies.

The plan is to change the way companies can repay losses of £25,000 or more, from simply adjusting the self-assessment returns to being vetted beforehand. This means companies will have to pay their tax, and then wait for a refund.

Roy Maugham, a partner at UHY Hacker Young, an accountancy firm, said that if the new scheme is implemented, companies who are in difficulty will experience “serious cash flow problems”. He said “some will probably go under as a result”.

HMRC said the proposals are currently under consultation and that they “aim to explore ways of ensuring that genuine business and employment losses are relieved, while deterring tax avoidance at the outset.”

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