Spanish Government has been told to rein-in its “out of control” tax authority which is accused of hounding expat Brits or face legal action. An international law firm plans to sue Spain unless it curbs “rapacious tax inspectors” it says are guilty of “deplorable conduct”.

The Spanish Tax Authority’s “rampant” inspectors are accused of “turning lives upside down” and “destroying the health of their victims”.

Both expatriates and ordinary Spanish citizens are reported to fear the “knock on the door” and “sudden investigation and relentless pursuit”.

Law firm Amsterdam & Partners LLP says taxpayers are “hunted like animals until exhaustion and terror overwhelm them”.

Founder Robert Amsterdam described the experience of expatriates, saying: “Many have suddenly found out that, like a large scorpion, their stay in Spain has a sting in the tail, with the poison developed and delivered by the STA.”

Official Foreign Office advice says UK citizens should “seek professional advice on paying tax in Spain from a lawyer” or from a “gestor” – a “professional agent who specialises in dealing with Spanish administrative bureaucracy”.

Reform UK MP Lee Anderson said: “The STA needs to reign it in immediately. The Spanish Government has no right to be bringing British citizens into greater financial ruin, especially when their own Labour government is already doing this for them.

“It’s not just the UK, the robbery and abuse of the taxpayer is plaguing all of Europe. We should be grateful for leaving that system.”

According to the law firm: “Typically, victims are hit with huge, unexpected tax demands and threatened with massive penalties unless they pay up. They are told that if they want to appeal, they must first pay the tax demand up front.

“Those who dispute unjustified demands are then urged to do a deal under which the original tax demand and the penalty are reduced but large sums are still due. Many give up in despair and settle the bill.”

Foreigners have been drawn to Spain by a favourable tax scheme known as the “Beckham Law” – named after David Beckham who moved to Spain to play for Real Madrid – which allows for a rate reduction in income tax. But Spain is accused of not honouring its “side of the bargain” with people facing “retrospective Kafkaesque inquiries probing their affairs far into the past”.

The firm states: “In many cases they will have left the country long ago, to take up employment elsewhere, before the unexpected attack has been launched. Out of the blue and in many cases, arguably out of time, these people have been identified as targets by the revenue-hungry STA.

“Accused of nothing that the STA is willing to reveal to them, they are subjected to an investigation into their personal life and their worldwide assets that is breathtakingly wide and intrusive.”

An advertising campaign will be launched across Spain in the coming days and a campaign - spanishtaxpickpockets.com - is up and running. The Government is urged to “launch an independent, systemic review of the STA and commit to implementing its recommendations”.

Mr Amsterdam said: “The STA is guilty of the most appalling abuses of state power in which innocent, law-abiding and hard-working people suddenly find their lives turned upside down as they are subject to inquisitions into their affairs with no justification in law...

“This grossly illegal and punitive raids by Spanish tax inspectors must end. If the Spanish government does not act now, we will resort to the Spanish and European courts to get justice for the victims, whose lives have been made a misery by a bureaucracy gone rogue.”

The Spanish Government was invited to comment.