HMRC has raised an additional £3.3bn in the last year through inquiries into the under-payment of VAT by SMEs, says PfP, the experts in tax investigation insurance.
PfP explains that the figures relate to work undertaken by two newly created specialist HMRC teams- the Individuals & Small Business Compliance unit and the Wealthy & Mid-sized Business Compliance unit.
The figures show that VAT is a key area of focus for HMRC as it looks to maximise tax revenue. PfP says that further investigations are likely to follow, and SMEs should ensure that their tax affairs are in order as a result.
Kevin Igoe, Managing Partner of PfP, comments: “VAT investigations into SMEs have proven incredibly rewarding for HMRC.”
“The figure will be driven by a combination of carelessness, genuine error or misunderstanding, as well as deliberate and calculated underpayment.”
“Whilst the vast majority of SMEs 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 businessowners are likely to find themselves under close scrutiny as the Revenue looks to weed out any remaining underpayment.”
“It is therefore paramount tax records and systems are in order. Any uncertainty over when and how much VAT should be paid should be cleared up via professional advice, or clarification from HMRC itself.”
“Tax investigations can be lengthy, costly and incredibly disruptive to businesses- particularly for those smaller in size, who are unlikely to have in-house tax specialists or ready access to the best guidance.”
“HMRC’s new online cross-referencing database system, Connect, makes it all too easy for officers to pick up errors or discrepancies reporting in tax returns. Anyone mis-reporting on VAT is likely to attract attention very quickly.”