Unified UK Tax Service Would Like The Key To Your Computer

by Jeremy Hetherington-Gore, Tax-News.com, London

14 March 2005

Companies in the UK have been worrying that the newly unified Customs and Inland Revenue Department will develop more intrusive and aggressive techniques to enhance tax collections - and a scary talk by Customs R & D head Alastair Stewart at the March Softworld Accounting & Finance exhibition in London emphasized that their fears are well founded.

The way Stewart sees things, the tax service will have a European scale electronic compliance, collection and audit gateway into companies' accounting records. Information needed by Government will be provided (extracted?) automatically and distributed to relevant Government departments. Expert systems will compare business patterns with statistical expectations in order to detect irregular activity which might indicate fraud or tax evasion.

"Ultimately there will be a single portal for filing information with the government and the data will be disseminated to individual departments to improve efficiency there," Stewart said.

Using a fictional Japanese company, Yohula Toys and Games, Stewart described a harmonized EU tax regime in which the company would be based in Germany for tax purposes but would have its electronic archives in Italy, open to scrutiny by the German tax inspectors using UK-developed software. Brussels would also have access to the archives in order to operate environmental tax regimes, of course.

Stewart admitted in his talk that companies, the software supply industry and auditors didn't wholly share his vision of the future, and were resisting calls for the establishment of Standard Audit File format (SAF-T), a necessary precursor of harmonized auditing. However, he thought that eventually companies would embrace automated collaboration with Government "because it's easier."

Evidently there is no place in this European fiscal dreamscape for 'offshore', which did not feature in Mr Stewart's presentation and will no doubt have been airbrushed out of the picture by the time his nightmarish visions come into being.

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