Small businesses were last night said to be feeling the force of a tougher taxman, in light of his haul from compliance investigations into them leaping by almost a third in the last year.
In fact, HM Revenue & Customs’ officers who investigated SMEs in 2012-13 raked in £565m, up from £434m in 2011-12, show year-end March 31 figures obtained by an adviser.
The ambitious target set in the 2010 Spending Review for HMRC to net an extra £7bn a year in additional revenues from compliance work is behind the surge, said UHY Hacker Young.
Since then, 40 specialist taskforces have been deployed by HMRC, often to catch small traders - taxpayers who the department is “desperate to squeeze as much money as they can” from.
UHY added:“SMEs 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.”
“That also means they are in a weaker position to negotiate over allegation of underpaid tax than a big corporate.”
UHY’s Roy Maugham believes that small businesses are “bearing the brunt of HMRC’s tougher approach to tax investigations,” characterised by “short, sharp burst of compliance” probes.
He said: “While the tax affairs of large corporations such as Starbucks and Amazon have been publicised heavily, HMRC’s crackdown on SMEs has not attracted as much attention.
important for SMEs to be aware of the risks they face if their tax affairs are
not in order, because SMEs are increasingly on HMRC’s radar – as the
ever-growing yield from these investigations proves.”