Number of businesses suspected of payroll tax fraud rises

THE AMOUNT OF BUSINESSES suspected by HM Revenue & Customs of committing payroll fraud has risen 50% in the past two years, according to the department’s figures.

In the 2012/13 tax year, inspectors targeted 2,099 businesses that they suspected of underpaying income tax and national insurance – up from 1,350 two years earlier.

The figures have given rise to suggestions that despite optimism over the economy many companies continue to struggle and a large number of business owners were still trying to rescue their business by deducting tax from employees but using it to keep trading.

Anthony Harris, chairman of UK200Group member firm Critchleys,  said: “This issue falls into more than one category: mistakes in operating an increasingly complex system of deducting taxes from employees; deliberately returning incorrect information to HMRC on employee deductions; struggling businesses failing to pay over taxes deducted from employees and; failure to submit correct P11Ds.

“I agree that all businesses should deal with all the above properly and all firms of chartered accountants operating payrolls for their clients appreciate the complexity laid upon business by HMRC because it increases our fees. But pity the poor small entrepreneur who has to pay these fees because they seem to need a degree in business management to run a small shop these days, or pay a fortune to us luck accountants to help them out.”