Tax inspectors will be able to carry out spot-checks on all companies and self-employed people who run their businesses from home from next April. Under the new scheme, inspectors will be allowed to visit businesses with no warning to “inspect records, assets and premises”.

This extension of HM Revenue & Customs’ power comes as it also prepares to address the issue of tax loopholes in the coming year. The Treasury claims that the crackdown, which it calls “protecting tax revenue”, will raise £660 million in revenue next year alone. It will boost the Government’s coffers by more than £1.75 billion over the next three years — more than the increase in alcohol duties will garner.

These moves come amid mounting concern about the balance of power between HMRC and the Treasury, with speculation that HMRC’s tax-raising abilities are now popular with a Chancellor struggling to balance the books.

At present, HMRC must open an inquiry into a company and then give 24 hours’ notice of a visit.

Rose-tinted specs fail to offer hope

The obvious justification for Mr Darling’s relatively upbeat scenario is that the outlook is fraught with uncertainty

Background

• Darling's first Budget: the main points

• The Chancellor's speech in full

• Darlings first Budget: the reaction

• Chancellor hits the home budget as his debts soar

• Need to know: Budget 2008

The Chancellor delivers a modest Budget

As so often is the case, virtue, in terms of improving public finances, is not now, but at least a year away

Multimedia

• Video sketch: Matthew Parris and Ann Treneman

• Eco-worrier: should we be pleased?

• Green Central: round-up of the green Budget measures

Multimedia

• Red Box: a list of Darling's new enemies

• The winners and losers

• Video: the 'fingers crossed' budget

Stephen Camm, of the accountant PricewaterhouseCoopers, said: “The changes in HMRC’s power to inspect businesses is in keeping with the mood. HMRC wanted more authority to tackle non-compliance and it will be very happy with these new powers.”

Financial experts sounded alarm, however, at the possible implications. Toby Ryland, senior tax manager at Blick Rothenberg, the accountant, said: “It is unhelpful and a significant change to the way they work at the moment. Clients could be put on the spot with no representation or advice.”

Bill Dodwell, tax partner at Deloitte, the global financial adviser, described the change as scary.

However, VAT officials will lose the power to turn up at people’s homes without notice.

A spokeswoman for HMRC said: “The aim of the Powers Review is to align and modernise the powers and taxpayer safeguards that HMRC inherited from Customs & Excise and the Inland Revenue. The intention is to provide greater consistency and alignment of our access to records and information.”

The sweeping crackdown on tax loopholes will come as a blow to both businesses and individuals.

In an unusual move, the Treasury has backdated one of the tax amendments to 1987, meaning that companies or individuals who have taken advantage of tax-planning measure since then could be hit with a hefty tax bill in the coming months.

Any companies or individuals who have used trusts to take advantage of double taxation treaties to minimise their tax bills will be affected. The HMRC spokeswoman said: “There has been highly aggressive avoidance with the clear intent of frustrating [the] previous legislation, hence the clarification.”

The other measures include tightening special stamp duty exemptions for those who take out Sharia mortgages, stopping people from setting up loss-making businesses to minimise their tax bills and a crackdown on the way in which North Sea oil and gas companies calculate their tax liabilities. The Revenue will also clamp down on companies using UK-controlled offshore vehicles to minimise their tax payments.

Alex Henderson, tax partner at PricewaterhouseCoopers, said: “The Revenue has been systematically collecting details of tax-planning measures since 2004 and then introducing measures to stop them.”

Mr Dodwell said: “Although badged as anti-avoidance, some of the measures add to business costs in doing business internationally. They will be borne by a relatively small number of larger enterprises with more complex tax affairs.”

He said that the amount of money that the Treasury was hoping to raise from these measures was only a “guesstimate”. “The team in the HMRC have to guess what they will earn from the measures.”

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