<?xml encoding=”utf-8″ ?????????>
HMRC figures out today show the tax authority believes small businesses are now responsible for 56% of the UK’s ‘tax gap’ – a total of £20.2bn in a single year*, says multinational law firm Pinsent Masons.
This figure has now risen for four consecutive years. Small businesses were only believed to be responsible for 40% of the tax gap in 2017/18 – a total of £12.8bn.
Steven Porter, Partner and Head of Tax Disputes and Investigations at Pinsent Masons, says: “HMRC is really shifting its attention to small businesses. It has worked hard to reduce the amount of tax that goes unpaid from large businesses and high net worth individuals – but it still has a lot of work to do on SMEs.”
“HMRC’s focus on large businesses and wealthy individuals means that small businesses get less attention. Investigations into small businesses anecdotally often take longer to complete and problems can persist for years.”
“For example, there are cases of small businesses continuing to use tax avoidance schemes for years after they were virtually wiped out among large businesses and high net worths.”
“Small businesses that aren’t tax compliant should not be surprised if they are investigated by HMRC over the next couple of years. That’s clearly the direction that HMRC looks set to go into based on these figures. Getting out ahead of that problem by taking professional advice would be a very good idea at this point.”
Pinsent Masons adds that the overall tax gap for the UK held steady at 4.8% of all tax theoretically due, the same figure as last year.
The tax gap measures the difference between the amount of tax which should, in theory, be collected by HMRC and what is actually collected. Much of the gap will relate to avoidance and evasion.
