Restaurateurs and other small business owners are being targeted by HM Revenue & Customs (HMRC) as part of a national crackdown on tax evasion.

Over the next few weeks, specialist tax inspection teams will pursue restaurants with intensive sting operations across London, Manchester, Liverpool, Cumbria and parts of and Scotland.

For many years, HMRC has viewed the restaurant trade as a ‘high-risk’ sector, but the announcement suggests adoption of a new approach to dealing with non-compliance.

Over the next four years, the government plans to raise more than £80bn on behalf of the Exchequer, primarily through a clampdown on non-compliance and tax avoidance.

While the objective and sum HMRC are both mammoth, I still think the amount of resources being pushed into this particular endeavour, which is effectively an attack on small and medium enterprises (SMEs), is astonishing.

SMEs cannot afford to employ specialist accountants and lawyers to help them pay minimal or no tax, but many of the FTSE 100 and other large companies that do have been offered voluntary tax disclosure facility schemes.

It’s part of their business models to avoid paying tax, so surely it would be more cost-effective for HMRC to increase the revenue it collects from these corporations? And yet the axe still falls on the SME trader. You have to ask yourself; ‘why’?

Chances are; the larger businesses have former government ministers sitting on their non-executive boards.

But SMEs rarely have access to influential advisers so it’s just the same old politics: the Exchequer needs more revenue, but targets the less-well-off rather than corporations, even though SMEs are the engine room of the British economy.

This scheme is nothing more than the Tory-led coalition trying to get HMRC to generate greater income.

But the truth is: if HMRC were to start bashing down the doors of large corporations, these companies would reign in the chequebooks and simply reduce the amount of donations the government receives come election time.

Conversely, the SME economy is easy pickings for creditors such as HMRC because it’s vibrant, creative, entrepreneurial and, most importantly, resilient.

Sadly, the consequences of this approach can be detrimental for small businesses as proportionally, they end up paying more tax than their larger counterparts.

The former directors of MG Rover Group (MGRG), who pocketed over £40 million as the company spiralled into administration, should have been punished with lengthy disqualifications forcing them into early retirement and out of business management.

Instead, Peter Beale, John Towers, Nick Stephenson and John Edwards – known as the ‘Phoenix Four’ – received bans varying in length from three to six years.

As directors of Phoenix Venture Holdings, the quartet callously siphoned off £42m in pay and pensions while Britain’s last large car manufacturer collapsed into administration owing creditors more than £1 billion.

An independent report into the directors’ behaviour revealed that 24 hours after the government appointed inspectors to investigate MGRG’s demise, Beale bought a software program for his computer called Evidence Eliminator which he used to remove information about the income and benefits received by Towers.

Further investigations by the Insolvency Service (IS) found the businessmen created companies that helped them to manipulate income streams and assets so they, rather than MGRG’s creditors, profited.

Although the Phoenix Four deny any wrongdoing and have promised to make £30 million available to more than 6,500 former employees, I still think these guys got off lightly considering they could have been banned from managing companies for up to 15 years.

MGRG, which the businessmen bought from BMW for £10 in 2000, fell into administration in 2005.

It has taken six years for creditors and employees to get any kind of justice, which is far too long but, ironically, the exact length of time it’ll be before the Phoenix Four are back in business.

It begs the questions: with how much rigour was the IS pursuing these men who orchestrated a premeditated conspiracy which caused so much suffering?

The Phoenix Four should have been made bankrupt and ordered to repay, restore and account for all the losses they caused; an amount well in excess of the £30m they’re making available.

Moreover, what happened to the rest of the money, and how can the story end without at least one of these directors facing criminal charges?

Only the IS can answer those questions, but two things are becoming increasingly clear: bans can no longer be considered an effective deterrent, and white collar crime pays handsomely.

Garry Hacker, an insolvency practitioner who stole over £200,000 from clients and insolvency estates and put the money into his accounts, has been sacked from veteran accountancy firm Chantrey Vellacott and had his licence removed.

At a disciplinary tribunal hearing led by the Institute of Chartered Accountants in England and Wales (ICAEW), Hacker admitted transferring funds into accounts belonging to his former domestic partner; another woman described as ‘Mrs A’; and his own Royal Bank of Scotland, Barclays and GE Capital accounts.

According to the ICAEW: ‘The admissions made by Mr Hacker in his meeting with the partners… clearly identify that he was aware his conduct was dishonest, and that is why he sought to conceal it over the years.’

The professional governing body described Hacker’s misappropriation of more than £230,000 between 2001 and 2010 as ‘grave’ and ‘most serious’, however, their punishment seems very lenient.

Hacker was declared bankrupt in August 2010 and is therefore ineligible to practise insolvency or accountancy; so the ICAEW’s decision to revoke his licence makes the governing body appear impotent and out of touch.

Moreover, had it not been for the actions of a cashier who spotted a single irregular transaction, the fraud could have continued for another decade and no one at Chantrey Vellacott would have been any wiser.

How could an insolvency practitioner steal for eight-and-a-half years without anyone noticing, and what does it tell you about the accountancy firm’s internal audit procedures which should have picked up any discrepancies within the first 12 months?

Chantrey Vellacott is a reputable firm with a 223 year history. Surely, a partner or senior manager should have been checking Hacker’s work?

No doubt, HM Revenue and Customs would have been a creditor in many of the insolvencies Hacker worked on so he was also stealing taxpayer’s money.

Sadly, this really looks like a case of the industry looking after its own as Hacker was an affiliate of the ICAEW who acted as both judge and jury.

Examples such as these illustrate why the industry needs better regulation polices. Irrespective of the circumstances or his links to the ICAEW, Hacker stole a large amount of money, so why the hell wasn’t he prosecuted and sent to jail?

Britain must have new legislation to ensure cash from deposits and voucher sales is returned to customers when a retailer goes into administration, according to the Institute of Chartered Accountants of Scotland (ICAS).

The call follows the recent insolvencies of retailers such as music chain Zavvi and furniture supplier MFI where customers lost cash paid to the firms before they went into administration.

ICAS says legislation would resolve the issue, but I don’t think that’s necessary. Let’s face it; some vendors are going to use money from the sale of vouchers and deposits as part of their cash flow, which is understandable considering the economic climate.

If a customer enters into a transaction and pays a deposit; retailers may take the view they are entitled to use that money because a contract has been consummated.

Therefore an alternative option should be made available to retailers who want to uphold fiduciary duty: a trust account for customer deposits that is ring-fenced from insolvency and does not constitute part of the company’s assets in the event of liquidation.

If directors fail to establish a trust account and the company becomes insolvent, they should face disqualification proceedings for breach of fiduciary duty, which is also an act of misfeasance under section 212 of the Insolvency Act 1986 and could result with the directors being held personally liable for the deposits.

That’s the way forward and we don’t need to create any new laws because the legislation is already in place: fiduciary duty is enshrined in the Companies Act 2006 and misfeasance is part of the Insolvency Act 1986.

Presently, the liquidator could pursue the directors of Zavvi and MFI because it is an act of misfeasance for them to have used company money in the 12 months leading up to the liquidation.

Both companies were insolvent and in the absence of cash from voucher sales and deposits would have crashed to the floor.

But in these situations, liquidators hardly ever pursue directors, chiefly because they are usually appointed by the directors; and actions against directors can only be brought and funded by creditors who all too often remain muted.

If there’s any change in legislation, it should be for insolvency practitioners to pay an increased part of the prescribed realisation proceeds to unsecured creditors.

Premier League head Richard Scudamore has attempted to defend the football creditors’ rule, following a lawsuit filed by Her Majesty’s Revenue and Customs (HMRC).

HMRC, quite correctly, claim the rule on paying soccer creditors first is ‘unfair, unlawful and unacceptable.’

However Scudamore insists the directive is necessary to prevent one team’s financial problems from destabilizing the entire league.

He said recently: ‘We will defend it on the basis of the chaos that will ensue if we don’t have it. We are a closed system: we trade on a closed basis between each other.

‘The idea you would put an administrative blockage of a due diligence; it’s a place we just wouldn’t want to go.’

Scudamore’s comments highlight just how manifestly unjust the football creditors’ rule is.

The English Premier League generates annual revenue of around £2 billion and is the soccer industry’s most lucrative domestic competition.

But if the football industry is to exist as a commercial enterprise, it must be subject to the same rules and regulations as other industries.

Insolvency legislation is created to govern enterprise; in regards to bankruptcy, there should be no special favours given to football clubs.

Why should they receive special treatment in the event of insolvency? They’re just another commercial enterprise within the UK economy. Sudamore is simply attempting to defend the indefensible.

It is grossly unfair to have an insolvency regime for the football enterprise, which is more favourable than the insolvency legislation as we know it.

Moreover, nowhere in either the Enterprise Act 2002 or the Insolvency Act 1986 does it state that football clubs should receive special protection. It’s laughable this issue has found its way so far to the high court.

There is no provision, clause, sub-paragraph or sentence to be found anywhere in either of these acts that gives football creditors preferential status; it’s simply a figment of their own imagination.

A few weeks ago, the Parliamentary Under-Secretary of State responsible for the insolvency regime, Ed Davey, unveiled a series of proposals aimed at reforming ‘pre-pack’ administrations.

These include forcing insolvency practitioners (IPs) to give creditors prior warning about the sale of significant proportions of a company’s assets to a connected party.

Under the terms of a pre-pack, collapsed businesses that enter administration can be sold almost simultaneously. However, this process, known as ‘phoenixing’, is often abused by directors trying to avoid debt.

Davey claims the new proposals will improve transparency and reduce phoenixing, but I don’t think they go far enough.

On the one hand, he says creditors must be able to oppose a connected-party sale, but then only recommends a three-day notification period.

Creditors must have more than 72 hours to question the terms of a pre-pack or come up with a counter offer. Obviously, the government wants to appear to be appeasing creditors, but this is simply piecemeal.

If Davey really wanted this to work, he’d have suggested at least seven to 10 days notice. What if a director or creditor is out of the country – how much difference will 72 hours really make?

I can’t think of another piece of insolvency legislation that specifies a three day notice period; all the others range from 14 days to six weeks.

Davey also recommended that IPs should include their reports about pre-packs (Statement of Insolvency Practice 16) into administration proposals, which will make the documents available to the public and credit reference agencies.

Nonetheless, the government’s efforts to increase transparency in this area of insolvency are nothing more than window dressing.

Most of the time, pre-packs are sprung on creditors and directors by surprise, and this is the part of the legislation most open to abuse. Sadly, these proposals do little to change that.

From April 2012, HM Revenue and Customs (HMRC) will require a security from employers if they suspect National Insurance Contributions (NIC) and Pay As You Earn (PAYE) taxes will be unpaid.

HMRC claims the new legislation, which includes a criminal offence for business owners that are asked to give security but fail to do so, targets employers guilty of ‘serious non-compliance’.

The announcement should be of particular interest to small-to-medium business owners looking to raise finance because they won’t be able use assets controlled by HMRC to secure additional loans.

Additionally, if a company goes into liquidation with serious VAT debt and the director(s) launch another business, the taxman will require a deposit before they allow the new venture to be VAT registered.

As these provisions already exist in relation to VAT, HMRC is simply trying to reduce the number of employers who pay VAT, but ignore NIC and PAYE.

When it comes to debt collection, HMRC are becoming increasingly more aggressive, particularly with small-to-medium businesses who should understand the new legislation effectively places the taxman ahead of other creditors.

Ex-Prime Minister and Chancellor Gordon Brown supported small businesses by introducing Time to Pay Agreements and removing the taxman’s status as a preferential creditor through the Enterprise Act 2002.

In contrast, David Cameron’s Tory-led coalition appears to be giving HMRC back their preferential status through the back door.

All creditors, unless they are secured, should be treated equally. That HMRC can ask employers for a deposit brings inequality and makes them a preferential creditor in everything but name.

Britain’s leading professional association for insolvency and business recovery specialists has launched an astonishing attack on suppliers who raise prices or stop serving companies that have fallen into insolvent administration.

According to R3, debt-chasing suppliers such as utility companies are responsible for 14% of liquidations and the rapid increase in pre-pack administrations, in which a buyer is sought before management relinquish control of the business.

R3 claim that amending the Insolvency Act 1986 to stop suppliers demanding ‘ransom payments’ from firms in administration would reduce the number of liquidations, but I disagree.

The fact is, if you’re doing business with a company that owes you money, wouldn’t you review the terms of the agreement going forward, principally to reduce yourself from exposure?

Of course you would because you have to protect shareholders and customers, and keep prices as low as possible to remain competitive in the marketplace.

If we are trading and I’m unduly exposed to a loss that I have problems recovering, of course it’s OK to review the terms and conditions of my contract with you.

Or to put it another way; if you bought a house and the previous tenants said they’d been burgled several times; wouldn’t you take steps to secure the accommodation?

Suppliers should be free to pursue outstanding payments as they please within the law and the government has already taken steps to deal with the utility companies.

Earlier this month, the UK’s energy regulator, Ofgem, announced plans to restrict the charges of Britain’s biggest utility suppliers (E On, British Gas, Npower, EDF, SSE and Scottish Power) and is encouraging them to sell off up to 20% of the electricity they generate to smaller companies such as Marks and Spencer and Tesco.

Personally, I think R3’s campaign has little merit. The Insolvency Act 1986 was written by and for insolvency practitioners and is therefore biased in their favour.

Amendments to the act, written by another group of insolvency practitioners, are unlikely to reduce the number of liquidations any time soon.

A lawyer has used Facebook to serve a court summons, in what experts claim is the first case of its kind in the UK.

Solicitor Hilary Thorpe claims she had exhausted all conventional methods of trying to contact a debtor on behalf of a client, before recalling a case in which the Supreme Court in Australia gave a lawyer permission to use Facebook to serve legal documents.

Ms Thorpe, who is an insolvency and directors disqualifications specialist for Eastbourne firm Gaby Hardwicke, asked staff at Hastings County Court in East Sussex to consider the same principle.

They accepted and last week she logged onto Facebook to serve the court order. Thorpe said: ‘It is great to see that the courts are willing to embrace new technology.

‘We have had great trouble serving the debtor in question. Being able to use Facebook to do so will certainly assist in the case and allow our client creditor the possibility of obtaining further information to enforce the debt.’

It’ll be interesting to see how this one pans out because serving proceedings on someone via Facebook is not proof they’ve been actually served. It’s dubious, but if successful would suggest there’s no reason why a court summons can’t be served via email also.

I can see the benefits, but also see lots of reasons for an appeal as there are numerous data protection issues here.

There’s no proof of service so switched on lawyers will say their client hasn’t been served or more than one person could be accessing the account and deleting emails maliciously.

Obviously, this is an example of the monolithic growth Facebook has experienced over the past five years; it’s unavoidable and permeates every part of our lives.

This is simply a sign of the times, but I think the idea will be beset with problems.

The liquidation of a management firm whose clients included sports stars such Ronnie O’Sullivan, Stephen Hendry and Olympic gold-winning cyclist Sir Chris Hoy is likely to set a lengthy court battle in motion.

According to the Daily Mail, several of 110 Sport Management (110SM)‘s former clients are preparing to launch compensation claims for outstanding payments against the company, which collapsed last month.

The sportsmen, who wish to remain anonymous, are angry the firm’s parent company, 110 Sports Group (110SG), continues to trade, but refuses to pay 110SM’s debts.

The company’s demise raises questions over the solvency of 110SG and another subsidiary, 110 Sport TV, which received more than £700,000 in public funds to launch an internet service that has so far proved unsuccessful.

Under section 239 of the Insolvency Act 1986, the liquidator could pursue the parent company for antecedent transactions if they establish that 110SG received ‘preference’ payments from 110SM in the 12 months leading up to the liquidation.

Under such circumstances, the liquidator can order 110SG to return the money to the collapsed company if those payments either caused the insolvency or were made when the firm was insolvent.

But to be honest, even if the liquidator were to take this action you’d find the money would probably go towards paying their fees.

If there are outstanding monies that could be recovered from a third party for the estate of an insolvent company, a liquidator will want to recover those funds and swell his company’s coffers. Remember, of course, the liquidator is paid before creditors.

Will the sports starts benefit? Probably not; that depends how much the deficiency is and how much it costs the liquidator to recover those funds.