HMRC set their sights on small businesses to plug ‘tax gap’

HMRC have shifted their focus away from large corporations and are now looking at small businesses, which they believe represent around 51 per cent of the country’s ‘tax gap’ - the difference between the amount of tax that is collected and the amount that is due.

HMRC estimate that larger corporations only make up 25 per cent of the UK’s total tax gap, whereas small businesses accounted for £18.3 billion in lost revenue in 2014 - 2015.

£468 million more collected from SMEs

Having started shifting its people around, HMRC are already seeing a surge in tax collected from small and medium businesses.

Local compliance teams investigating SMEs brought in an extra £468 million during the tax year 2015 - 2016, this coming as the self-employed face a slide in disposable income.

Change puts small businesses at risk, says UHY Hacker Young

UHY Hacker Young, an accountancy network, are worried about the impact these changes are having on small businesses.

“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,” said Roy Maugham, Tax Partner at UHY Hacker.

“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.”

HMRC targeting ‘sharing economy’ around tax return season

HMRC are currently making a concentrated effort to pursue those who’re selling online or producing products at home.

The agency are using an advanced computer program that targets the so called ‘sharing economy’ by coming through online selling platforms such as eBay and Etsy.

There is a danger, financial experts warn, that ‘mumpreneurs’ and other single-person enterprises may not be aware that they are due to pay tax and find themselves stung with a large tax bill.

Should HMRC concentrate on larger companies? Let us know in the comments.

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