HMRC close in on tax avoiding businesses
Are you paying these two types of taxes correctly?
H M Revenue & Customs (HMRC) tightened compliance around two different types of taxes in 2016. Research published this week revealed that a crackdown on small businesses amounted to an additional £3 billion for the taxman.
Experts are urging unsuspecting businesses to straighten out their books to avoid being caught out.
PfP – one of the firms which looked into HMRC’s additional earnings – found that VAT underpayments were the focus of the Revenue’s investigations.
"The figure will be driven by a combination of carelessness, genuine error or misunderstanding, as well as deliberate and calculated underpayment," said Kevin Igoe, managing partner of PfP.
"While the vast majority of small businesses are compliant, the actions of a rogue few mean that HMRC is likely to look closely at the tax affairs of all over the coming months. Many innocent business owners are likely to find themselves under close scrutiny as the Revenue looks to weed out any remaining underpayment."
Employment statuses were also scrutinised by HMRC last year. Law firm Pinsent Masons learned that the taxman pulled in an additional £322m from small businesses by clamping down on payroll tax avoiders.
The firm has speculated that that figure will be mostly made up of innocent mistakes, but that HMRC is also likely to be looking into those who falsely identify as self-employed.
Avoid getting stung
Small business owners must be careful to correctly report their taxes. Rates might be rocketing, but a run-in with the taxman is the last thing that any business needs.
Visit the HMRC website to make sure you’re paying the correct taxes.