Small business tax crackdown nets half a billion pounds

HMRC netted an additional £468m for the year ending 31 March 2016 as a result of investigations into small business tax affairs, according to a report from UHY Hacker Young.

In 2016, the unit investigating business taxes was split into two sub-departments.

• One monitors high net worth individuals and mid-to-large sized businesses.
• The other focuses on self-employed and small business owners.

New focus was placed on finding discrepancies in small business taxes, rather than larger businesses who can handle HMRC investigations.

Is HMRC being too heavy-handed on small business tax?

However, this shift in focus feels somewhat disproportionate.

Small businesses lack the same amount of time, resources and financial expertise as larger businesses. This makes them more prone to honest errors rather than malicious financial activity.

Small business owners might also point to some of the ‘sweetheart deals’ offered to major companies undergoing tax reviews as evidence that HMRC is treating them differently.

The most convenient and effective way to keep on top of your tax situation and overall business finances is to deploy advanced accountancy software, like Xero. Sync this software with an experienced small business accountant and you can steer clear of a HMRC investigation, and potentially a hefty fine.

Call on 3 Wise Bears to keep you on the right side of HMRC by ensuring your small business tax records are comprehensively managed.