Phil MeekinView Profile
After a crackdown on VAT by HM Revenue and Customs (HMRC), they have collected an extra £3.4 billion from small and medium-sized enterprises (SME’s) in the previous tax year which spanned from April 2016 to April 2017. HMRC have toughened up their stance on businesses which have failed to pay their VAT bill which has accounted for this significant amount of extra revenue.
These statistics come from a study by tax investigation insurance company PFP who have said that this tougher stance is increasing pressure on many SME’s. VAT accounts for 49% of the extra tax received via investigations into SME’s by the compliance team at HMRC, this is a rise of 4% on the previous tax year.
Inquiries by HMRC are costly, time-consuming and usually very disruptive for SME’s who may not have plans in place to deal with long tax investigations. So with these kinds of investigations set to continue under HMRC’s new tougher stance, SME’s will need to make sure they are fully compliant.
Managing director of PFP, Kevin Igoe, has urged businesses to work to avoid inquiries and fines from the taxman; “Over the years the Revenue has widened its net – cracking down on smaller businesses, as well as larger organisations.
“It’s clear from the high tax take that the Revenue has found investigations into SMEs to be fruitful, and therefore it is likely that this focus on smaller organisations will continue. In order to avoid scrutiny, SMEs must make sure they are filing their returns correctly, so as not to incur a hefty fine.”
As VAT can raise a lot of extra revenue, HMRC are prepared to go through the long and costly process if they think they stand a good chance of recouping unpaid tax and any additional money in fines. HMRC make use of their Connect database to identify those who may be underpaying on their tax and they can use tactics such as accelerated payment notices and property raids if necessary.
So while HMRC steps up in its tackling of unpaid tax bills, it is important that businesses, big and small, are aware of their tax responsibilities. Always make sure you file returns on time and inform HMRC of any changes or updates and for further information on how you should handle your tax, speak to your accountant.
If you are struggling with tax bills, late payment charges or fines for unpaid tax, get in touch with us on 0800 901 2475. Our friendly, professional advisers will be able to provide you with the help and advice you need to deal with your current situation.