HMRC nets £470m extra from small companies

Investigating small rather than large companies is paying dividends for the taxman, who last year earned an additional £470 million from probing such owner-manager businesses.

Uncovering the figure -- the yield from probes into self-assessed firms by local tax teams for the year ending March 31st 2015, accountants spoke of such small traders being a “soft target.”   

In fact, the £470m extra haul for the taxman comes as his investigations into big businesses abated last year by some 13%, from £4billion to £3.5bn, said the accountants UHY Hacker Young.

“Budgetary constraints mean small businesses do not tend to have tax specialists in-house, making it harder for them to challenge tax bills…that they see as unfair or inaccurate,” said UHY’s Roy Maugham.

“As well as being more likely for SMEs to make a mistake when it comes to their taxes, they are also less likely to effectively negotiate if they disagree with HMRC’s demands”.

Maugham also says small firms face the prospect of coming into contact with “specialist taskforces,” HMRC’s latest way to improve its tax take from owner-managed businesses.

“By concentrating resources on a particular sector, taskforces will aim to quickly and efficiently identify, investigate and enforce unpaid tax collection by SMEs,” he warned.

“Specialist task forces could see smaller businesses face even greater administrative burdens… [as the taskforces focus on] specific subsectors, and even on specific issues like corporate entertainment.”