If the answer is £540 million; what’s the question? The question is how much have HM Revenues & Customs’ specialist investigators collected in unpaid tax from sole traders and small businesses since 2010? According to figures released by HMRC, tax investigators have stepped up their efforts significantly in the year to April and have reclaimed £248 million in unpaid tax – increasing income ten-fold since 2010.
So how has HM Revenues & Customs managed to identify errant businesses and recoup such enormous amounts of unpaid tax? Well, over the course of the last 5 years, HMRC has introduced a team of specialist tax investigators across the country. Their job is to target tax evaders. To do that, they trawl through enormous amounts of data using specialised computing software and identify tax-related inconsistencies.
HMRC claims it is able to flag areas that post the most significant “tax risk” using Connect: an £80 million system that feeds in data from 28 different organisations notably Companies House, the Land Registry, Benefits Agency and onshore and offshore banks. This cutting-edge analytics software is apparently so thorough that evading or cheating the system has become almost impossible, as more than 50 different industries, including London-based taxi drivers and South Wales’ restauranteurs, have discovered over the course of the last 5 years.
Is the apparent targeting of the small business community likely to be relaxed after such success? Well, the answer appears to be no. The targeted campaign goes on. Jennie Granger, the director of enforcement at HMRC has issued a stark message to the small business community; pay your dues or action will be taken:
“Our expert analysts are at the cutting edge of developing and exploiting intelligence and smart data to tackle those who try to cheat the system. [So] come forward now – if you don’t pay what you should, we will take action”.
HMRC’s stringent, some would say controversial, approach to collecting unpaid tax has come under fire from certain sections of the tax and accountancy sectors. Questions have been asked about why HMRC is concentrating such efforts and control on the small business community whilst seemingly failing to tighten its control on multi-national companies. HMRC, however, has not directly addressed these concerns, but simply stressed that the new approach to tax collection is working across all sectors:
“Our taskforces cover a range of regions and businesses, but yield figures should not be considered the only measure of success. Taskforce activity has a deterrent effect, discouraging those tempted to break the rules.”
If your small business has any concerns relating to tax planning, business structures, book keeping, business planning and growth, raising finance and VAT registration, then call Steven Glicher accountants on 0161 485 8007 or email firstname.lastname@example.org.