Figures recently released by HM Revenue and Customs (HMRC) show that they recouped an extra £470 million in tax from small businesses last year as a result of increased probing. The figure was published as part of data obtained by UHY Hacker Young, who warned SMEs that they could come under further scrutiny with HMRC shifting its focus from larger companies to smaller firms. At the same time HMRC’s tax revenues from large businesses after tax inquiries declined by 13 per cent from £4bn to £3.5bn.
UHY Hacker Young fears that “SMEs can be a soft target for HMRC” simply because smaller businesses cannot afford to employ in-house tax specialists, making it harder for them to challenge tax bills which they may view as unfair or wholly inaccurate. They said: “Small businesses have already felt the effects of the taxman’s tougher approach to compliance, and the target to bring in billions more may lead to HMRC squeezing every pound it can from SMEs”.
For many years we have provided our clients with the option of taking out a protection policy which will protect them against the cost of fighting any unreasonable assessment raised by HMRC. We strongly believe that this cover is becoming more important, and these recent figures confirm this view. These policies will very shortly be due for renewal, and we urge all clients to think carefully before rejecting this cover.