HMRC plans to lessen the burden of audits and inspections via a raft of
proposals. These include a strategic risk analysis system to reduce the burden
on compliant businesses.
‘This will allow all data held by HMRC to be actively matched and profiled to
identify high-risk customers,’ said HMRC.
The move to make interventions more targeted has been welcomed by the small
‘Anecdotal evidence suggests that these audits were often unnecessary,
intrusive and unfair. In light of this revamping of the inspection process would
be welcome,’ said Phil McCabe of the Forum of Private Business.
In a review of its small business policy, the department admits its
traditional response for suspected non-compliance was too general. It has
pledged to reduce by 15% the time spent on auditing and inspecting businesses
found to owe less than £1,000.
‘This ‘one-size-fits-all’ approach could be disproportionately burdensome in
some cases, particularly for those who try to comply, but make mistakes,’ said
HMRC is trialling integrated ‘interventions’ for taxes on profits, PAYE and
VAT, rather than separate interventions on each tax area.
‘If there is a more general attitude to helping small firms make sure they
know how to meet their obligations then that’s something we support,’ says Simon
Briault of the Federation of Small Businesses.
New penalties will come into place next April with higher fines for those
deliberately falsifying tax returns, suspended ones for businesses who take
insufficient care to get it right and no fines for those who take care, but make
The department said this was in response to business concerns that ‘tax
evasion creates unfair competition’.
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Since the release of HMRC’s plans for digital tax reforms, many have agreed with the call for a delay