The Times notes:

Eight in ten of Britain’s biggest companies are set to clash with HM Revenue & Customs over new rules to hold finance directors personally liable for errors in the accounts, research suggests. Under new rules in the Finance Bill, due to be passed this summer, finance directors of Britain’s largest companies will face fines of up to £15,000 if they or one of their staff make a careless mistake when compiling their company accounts.

But research from Deloitte shows that 85 per cent of FTSE 100 companies would not expect their finance directors to pay the fines personally, and would instead pick up the tab. While HMRC said it had no power to stop the company paying the fine, doing so could damage the business’s relationship with the taxman.

“Such action could affect the company’s risk score if that action was seen as endorsing the failures of the senior accounting officer in relation to his obligations, and thereby showing a disregard for ensuring that arrangements are in place to underpin the reporting of tax liabilities.” A higher risk score means that HM Revenue & Customs views a company or individual more likely to be non-compliant over paying the right amount of tax.

What troubles the finance directors is that finance directors will be liable for “careless inaccuracies”, rather than only negligent or deliberate errors.

But hang on a minute: this just creates a level playing field. Small businesses, their owners and directors have been paying such fines for years at proportionately much higher rates, and out of their own pockets too. HM Revenue & Customs does not care why tax is not paid when it comes to small business: careless inaccuracies are negligent and penalties have been due. Every practitioner knows that. The real questions are “why has been big business been allowed to be careless for so long?” and “why should we tolerate incompetence in big business when small business has always had to get it right?”

Set in this context it is clear big business has picked the wrong fight, as has the CBI which said:

This proposal has been sprung on companies without any prior consultation, and will do nothing for the UK’s reputation as a place to do business. At a time when firms are struggling during the recession, this will saddle companies with the extra cost of having to pay for professional advice to ensure that they comply with the changes, as well as placing an additional administrative burden on them. Despite that, it would only raise a relatively small sum for the Government’s coffers.

Well, excuse me, but haven’t they noticed there is a legal requirement to maintain proper books and records at all times in the Companies Acts and haven’t they read the tax returns they’ve been signing?

I’m 100% with HMRC  who said that the new rules “will ensure that senior company officers have an active interest in ensuring that the systems and procedures within their companies are adequate to ensure accurate tax reporting”.

I have only one thing to add: the fines are too small. Far, far too small.