HMRC pockets more than £3bn from tax crack down on small businesses
“HMRC raised an additional £3.3bn from small businesses by cracking down on underpayment of VAT”, reports Hayley Kirton from City A.M, commenting on research by PfP. In light of their research findings, PfP have also been quick to warn those yet to balance their books that similar investigations by HMRC are likely to follow.
Commenting on this figure, Kevin Igoe, Managing Partner at PfP, suggests that “the figure will be driven by a combination of carelessness, genuine error or misunderstanding, as well as deliberate and calculated underpayment”.
Igoe continues that “while the vast majority of small businesses are compliant, the actions of a rogue few mean that HMRC is likely to look closely at the tax affairs of all over the coming months. Many innocent business owners are likely to find themselves under close scrutiny as the Revenue looks to weed out any remaining underpayments”.
With a similar level of scrutiny into payroll taxes, Pinsent Masons have also recently uncovered that HMRC acquired an additional £322m from small businesses, as well as an additional £383m from larger firms; this figure was likely due to HMRC looking into employment status further, and removing those who incorrectly report to be self-employed.
Paul Noble, Tax Director at Pinsent Masons reaffirmed that “businesses of all sizes need to be careful to keep tax affairs in order so as to avoid any investigations, and also seek advice where necessary”.
When asked to comment, a HMRC spokesperson carefully stressed the fairness of their investigation process: “we aim to treat all businesses, large or small, both fairly and consistently. Acting in the interests of the vast majority of businesses who play by the rules, our teams are busy tackling the minority who don’t”.
Whilst the crack down on small businesses in both instances above questions this notion of fairness, the resounding take away is that there is no greater time for you to get your books in order.