HMRC has netted £468 million from its investigations into the tax affairs of medium and small sized businesses. The figure is for the year that ended in March 2016 and comes from the accountancy group UHY Hacker and Young.
According to UHY Hacker and Young, HMRC has intensified its crackdown on smaller businesses as its investigations of larger businesses have become less profitable. Larger companies have the funds to employ tax specialists and have better resources which enables them to shutdown HMRC investigations.
Roy Maugham of UHY Hacker and Young said: “HMRC are showing signs of beginning to exhaust yields from investigations into large businesses. Many small and mid-sized companies may not have been at the top of HMRC’s agenda in the past, but are now coming under the spotlight.”
SMEs have fewer resources which means they have less access to tax specialists so are more prone to errors.
According to Mr Maugham: “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. 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.”
The unit within HMRC that is responsible for investigating the tax affairs of small businesses was split into two last year. One unit is now responsible for focusing on mid-sized and wealthy business compliance whilst the other unit concentrates on small business compliance and individuals.