HMRC recoups £470 million of small businesses taxes

 In News

New data released by UHY Hacker Young has revealed that HMRC last year pursued small businesses for an extra £470 million of unpaid tax.

UHY Hacker Young believes this is further evidence of HMRC shifting their focus from larger firms suspected of tax avoidance, to smaller ones who are easier to pursue.

By the end of March 2014, HMRC had collected £4bn in tax revenue from large businesses after tax enquiries, but by the end of March 2015, this had fallen £3.5bn: a 13% decline.

It is widely believed that HMRC finds it easier to pursue unpaid tax from smaller businesses as they cannot afford to hire tax specialists. This doesn’t just mean they avoid the sort of loopholes that larger firms routinely use, it also means that mistakes (whether made by the business, or by HMRC) go unresolved, leaving smaller businesses with taxes and fines they shouldn’t have been issued in the first place.

Roy Maugham, a tax partner at UHY Hacker Young, said: “As well as being more likely for SMEs to make a mistake when it comes to their taxes, they are also less likely to effectively negotiate if they disagree with HMRC’s demands as they will feel out of their depth and fear arguing with the taxman will lead to substantial costs and protracted disruption.”

Maugham also warned that HMRC is setting up a wider range of specialist taskforces with the specific aim of increasing tax revenues: “[HMRC’s] methods have changed in order to achieve this – it now focuses on specific subsectors, and even on specific issues like corporate entertainment”.

To make sure you stay on the right side of HMRC, talk to a qualified accountant and keep accurate records with the help of bookkeeping software such as FreeAgent or Xero.

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