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HMRC to tackle SME tax evaders?

Finance
Written by Roberta Murray
Wednesday, 26 May 2010
Tax investigations into multinationals are 18 times more lucrative than into SMEs. A new Coalition Government could prompt a tougher HMRC to put more pressure on SMEs in order to ensure every penny of tax is realised to restore public finances. Related Articles: HMRC clampdown provides results HMRC warns on email scam Proportion of companies wound up by HMRC continues to rise White Van Man takes big tax hit HMRC gives breather to businesses Related Links: HMRC But, will it be worth HMRCs time? Some interesting figures suggest not. Tax investigations into multinational companies are 18 times more productive than those into SMEs says UHY Hacker Young, the national accountancy group. For every £1 HMRC spent on investigations into multinationals during 2008/09, they clawed in £181 of tax. In contrast, tax investigations into SMEs and private individuals only generated £10 of extra tax for every £1 invested. "The Government is under pressure to reduce the UK budget deficit and the expectation is that they will try and collect more money from tax investigations. If that is the case these figures suggest that HMRC should avoid focusing on SMEs," says Roy Maugham, Tax Partner, of UHY Hacker Young. “Not only are the amounts of money to gain from investigating SMEs far smaller but also small businesses feel the pain of tax investigations much more acutely than multinationals.” The Liberal Democrats made a manifesto pledge to collect an extra £4.6bn by clamping down on tax in avoidance. UHY Hacker Young explains that when a smaller company is investigated by HMRC a higher percentage of that business's senior staff will be tied up dealing with HMRC than with a larger company. Explains Roy Maugham: “Many smaller businesses won’t have an internal finance function to help deal with a tax investigation. The most senior managers may have to sit in meetings with HMRC and they will probably have to pay for external tax advice.” In the past 12 months though, HMRC has generated £4.9 billion through tax enquiries into multinationals, but just £359 million from Self Assessment business and personal tax enquiries. “If we are set for a period of more frequent and more aggressive tax investigations we hope that HMRC shows some sympathy for SMEs – the statistics show it would be in HMRC’s favour if they did,” says Maugham. Share this: digg del.ico.us Newsvine Reddit Furl technorati Facebook Comments (1) Subscribe to this comment's feed The Lib Dems Posted by reece, 27 May 2010 These lib-dem lot are really getting annoying. Hardly anyone voted for them, yet they are now calling the most of the shots? HMRC is the monster that Gordon Brown built and they have too many powers which needs to be scaled back rather than added to. The more power HMRC have, the more abusive they become. The Internet is littered with articles about HMRC's attitude towards taxpayers - that they are guilty until they prove their innocence. So HMRC are above the law? Seems that way. The new governement needs to fix this. Post a comment Name (required) Email (required) (not published) Website Title By posting on this website you are agreeing to abide by our website comment policy and all posts are subject to the approval of the website editor. We will remove posts that contain offensive or threatening language, personal attacks on the writer or other posters, posts that are off topic and posts that are considered spam or specifically used to promote any commercial products or services. Any poster who repeatedly contravenes the policy will be banned from posting on the website.