HMRC in £468m small business tax haul
Local compliance teams investigating small and medium sized businesses (SMEs) brought in substantial extra revenue to the taxman last year.
HMRC has shifted its resources away from large businesses and towards SMEs, which they estimate represent 51 per cent of the country’s “tax gap”, the difference between the amount of tax collected and the amount that is due. This worked out at £18.3bn in lost revenue in the year 2014-2015. By comparison large businesses are thought to account for 25 per cent of the tax gap.
The accountancy network, UHY Hacker Young revealed the £468m tax boost following a Freedom of Information request. The group has warned that the clampdown risks causing disproportionate problem for small businesses that are unprepared for the closer scrutiny.
“There is increasing pressure on small and mid-sized businesses to spend their time and money on systems to ensure that tax affairs are accurate and up to date”, Roy Maugham, Tax Partner at UHY Hacker Young said.
“Without adequate care, small businesses are at risk of being pulled up over minor mistakes or small disparities, which could incur disproportionately heavy fines and penalties.
Customs also raised £3.5bn in taxes from investigations into unpaid VAT at SMEs in 2014/15.
With the 31st January self-assessment deadline looming, HMRC is also making a marked effort to pursue individuals generating additional income online or producing goods at home.
The agency is making use of an advanced computer programme that targets the “sharing economy” by scanning sites such as AirBnB, eBay and Etsy. Personal finance experts are concerned that many so-called “mumtrepreneurs” will be unaware they are liable for tax and could face both heavy fines and additional tax bills.
In 2014-15 the UK's tax gap fell to its lowest ever level, at 6.5 per cent, comparing favourably with 8.3 per cent for 2005-06. The UK Government has spent £1.8bn tackling tax evasion, avoidance and non-compliance since 2010.