HMRC recoups additional £489m in 2014-15 SME corporation tax
15th April 2016 | NewsHeightened HM Revenue and Customs (HMRC) investigations into SME corporation tax raised almost £500 million more for the 2014-15 financial year.
According to UHY Hacker Young, the tax authority has ramped up its investigations into ‘soft target’ small businesses with a view to narrowing the corporation tax gap; known as the theoretical amount of tax that should be recouped by HMRC, compared with what is actually retrieved.
The SME corporation tax gap has since narrowed from £2.1bn in 2012-13 to £1.4bn in 2013-14, while the same gap for ‘large business service’ remained at £1bn across the same financial year timeline.
Roy Maugham, partner, UHY Hacker Young, said: “HMRC appears to be aggressively going after small businesses as ‘easy pickings’ and it’s possible they will look to accelerate investigations next year and beyond to further close the gap, rather than going after big enterprise.
“The substantial closing of the tax gap for SMEs and non-movement by bigger companies is a clear demonstration of the increased pressure by HMRC on SMEs to fill the shortfall.
“Whilst small businesses are being increasingly pursued, large companies such as Facebook, Amazon and Starbucks are seen to be ‘getting away with’ paying disproportionally small amounts of Corporation Tax.
“Understandably, the public is increasingly frustrated about large companies failing to pay their fair share of Corporation Tax, whilst SMEs feel they are shouldering much of the tax burden by repeatedly coming under fire from HMRC.”
The unexpected nature of HMRC investigations and subsequent tax bills tends to negatively impact on the short-term cash flows of small businesses, damaging growth plans.
The best route for avoiding an HMRC tax investigation would be to employ an accountant first and foremost. Using an accountant can help ensure your financial affairs are accurate and compliant with the UK tax regime.
If you’re a small business owner and you’d like to discuss your corporation tax liabilities with your local TaxAssist Accountant, please don’t hesitate to call our friendly team today on 0800 0523 555 or drop us a line using our online enquiry form.