HMRC are reportedly continuing to target small businesses in the UK over compliance issues, in order to meet the tax target set by the Chancellor. Although the government have committed themselves to cutting down on the red tape that currently hampers many SMEs, this latest HMRC crackdown could see businesses unfairly targeted.
A report from contractor news site Shout99 revealed that HMRC investigations into SMEs brought in an addition £434m in 2011/12, which was up a staggering 39% from the £311 in 2010/11. Roy Maugham of UHY Hacker Young, one of the UK’s leading accountancy firms, commented on HMRC’s latest activity and what it meant for small businesses.
He said that SMEs may be an easy target for HMRC as they are more likely to make innocent errors in tax calculations as well as finding it harder to afford full time accountants. He continued, saying “many businesses are still struggling during the recession so having to pay extra taxes, fines and interest is the last thing they need.”
Mr Maugham revealed that HMRC are now taking a closer look at issues such as like corporate entertainment and employee benefits, which he said had previously escaped serious scrutiny. He warned that “Small businesses need to be aware of this when completing their tax returns. The days of HMRC having a relaxed approach to assessing deductions are long gone.”
Another study, from the Adam Smith Institute, has suggested an initiative to help SMEs and has called for employers national insurance contributions to be relaxed in order to help create more than 500,000 in the UK. Their report said “By phasing out NICs, the Treasury would create a positive signal to small business owners and change their expectations, encouraging them to expand and hire again.”
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