Small business tax probes too intensive
The taxman has come under fire after it was revealed that more than half of small and medium sized enterprises (SMEs) think that HMRC’s tax investigations are too intensive.
Commissioned by the exchequer, the showed that 52% of small businesses find HMRC tax investigations too intensive and 56% said they don’t think HMRC tries to minimise disruptions caused by the cost, time and effort of inquiries.
Insurance firm PfP said that smaller businesses are disproportionately affected by HMRC investigations and warned that discontent was rife among Britain’s SME population.
“Small businesses think they are getting rough treatment from HMRC and are making this clear,” PfP Managing Director Kevin Igoe.
He continued: “[They] are often at the receiving end of lengthy tax investigations, which can be very disruptive. Many of these businesses also do not have the resources at their disposal to manage an inquiry or negotiate with inspectors.”
PfP say that HMRC nets large amounts of extra cash from small businesses. This is evidenced by the fact that the taxman’s investigations team collects £16 of extra tax money for every £1 it spends.
A HMRC spokesperson said, “We do not recognise the figures quoted. We treat all businesses fairly and consistently. Where businesses satisfactorily explains entries in their tax returns, we close down the enquiry immediately.
“HMRC does not fine anyone if reasonable care is taken in completing a return. Only if a customer is careless or deliberately submits an incorrect return can they be liable for a penalty.”
Last month, HMRC revealed that small businesses were responsible for 41% of the nation’s tax gap. This is the difference between the amount of tax due to the exchequer and the amount that’s collected.
SMEs collectively accounted for £13.7bn of lost income, while large businesses accounted for £7bn.
Miles Grady, Director of Cloud Accountant said: “Basic tax audits should be a routine for most companies. The easiest way of preventing a costly full-scale tax investigation is to keep clear records that are checked over and approved by an accountant.
“If you are worried about a tax investigation, make sure you speak to a professional as soon as possible. They will offer advice and help you negotiate the best terms with HMRC.”
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