SME tax investigations nets HMRC £565m in past year
Yield from investigations into SMEs' tax affairs up more than 30%
THE TAX YIELD derived from HM Revenue & Customs investigations into the affairs of small- and medium-sized companies rose by 31% over the last 12 months, according to UHY Hacker Young.
Compliance investigations into SMEs generated £565m for HMRC in 2012/13, up from £434m in 2011/12, with the year ending March 31.
The 2010 Spending Review saw the chancellor set a target to net an extra £7bn a year in additional tax revenues from compliance activity.
Since then, HMRC has ramped up compliance activity with the launch of 40 specialist taskforces aimed at extensive investigation into businesses and individuals.
HMRC’s taskforces have raised over £60m in additional revenue already, with one taskforce focused on the fast food industry raking in £25m. In July 2013, a specialist taskforce tackling small businesses in the holiday industry in South Wales was launched, which is expected to bring in £2.5m.
UHY Hacker Young tax partner Roy Maugham said: “Small businesses are bearing the brunt of HMRC’s tougher approach to tax investigations. With an ambitious target set by chancellor to bring in billions of pounds through additional compliance, HMRC is desperate to squeeze as much money as they can from businesses who may owe tax.”
“With far smaller budgets than larger businesses, 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.”