Survey reveals SMEs annoyed by HMRC investigations

HMRC’s own research shows that over half of small businesses in the UK think its tax investigations are too intensive, according to a new report

The HMRC-commissioned research reveals that:

• 52% of small businesses think HMRC’s tax investigations are too intensive
• 56% of businesses do not think HMRC attempts to minimise the cost, time and effort involved in dealing with inquiries

PfP, which specialises in insuring against the cost of tax investigations, says tax investigations can be hugely disruptive for small businesses and often result in large professional fees, which drains resources and uses up funds that could have been reinvested in the business.

However, smaller businesses are often targeted because they are unlikely to have the same resources as large businesses, such as legal teams and tax specialists, to negotiate with tax inspectors and close down or limit inquiries. PfP says the focus on small businesses is likely to continue given the high levels of extra tax collected by HMRC through its investigations into this taxpayer group.

Kevin Igoe, MD at PfP, said: “Small businesses think they are getting rough treatment from HMRC and are making this clear. Small businesses are often at the receiving end of lengthy tax investigations, which can be very disruptive. Many of these businesses also do not have the resources at their disposal to manage an inquiry or negotiate with inspectors.

“Although some small businesses responded positively when asked about their impressions of HMRC’s investigations, we need to get to a point where an overwhelming majority are happy with what’s happening.”