By Lyndsey Hall
According to a report published by accountancy firm UHY Hacker Young, HMRC’s tax receipts from investigations into small and medium-sized businesses have increased by 31% in the last year. In fact, “Compliance” investigations into SMEs alone raised £565m for HMRC in 2012-13, up from £434m in 2011-12, according to the report.
In the 2010 Spending Review, the Chancellor stated that he aimed to net an extra £7bn a year in additional tax revenues from compliance activity. Since then, HMRC’s taskforces have targeted a wide range of sectors for potential tax avoidance; from medics and plumbers to restaurant owners and door-to-door sales people.
“Small businesses are bearing the brunt of HMRC’s tougher approach to tax investigations,” said Roy Maugham, Tax Partner at UHY Hacker Young.
According to Maugham, small and medium-sized businesses are often less likely to have accountants to manage their finances, making them prone to mistakes when filling in returns and therefore an easy target for HMRC, and leaving them in a weaker position to negotiate over allegations of underpaid tax than big corporations.
According to the Revenue, tax taskforces have raised more than £80m for HMRC since 2011, and it expects to bring in more than £90m per year from new taskforces launched over the next three years.
Can you afford to be hit by a potentially huge tax bill for non-compliance? Make sure your business isn’t in danger of being caught out by the tax man.
If you run your own small or medium-sized business and want some impartial advice about how HMRC are looking into your tax affairs or you would like a tax audit to see what your risks are, give Knowles Warwick a call. It can be very expensive getting the right professional advice to help you with a tax enquiry, however there is insurance cover available to help you with the cost. Ask your accountant about Fee Protection or contact Knowles Warwick to find out how we could help.