HMRC collected extra £3.3bn in unpaid VAT from SMEs

HMRC has collected an extra £3.3bn in unpaid VAT over the last year, following investigations into SMEs. Such successful returns from these enquiries means more are likely to follow, and business owners should ensure that tax affairs are in order as a result.

The extra tax was collected by two newly created specialist HMRC teams, the Individuals & Small Business Compliance unit and the Wealthy & Mid-sized Business Compliance unit.

The underpaid tax will be the result of a combination of carelessness, genuine error or misunderstanding, as well as deliberate and calculated underpayment by a few rogue individual businesses.

Such errors, mistakes or underpayment by the minority inevitably mean, however, that all SMEs will now come under increased scrutiny, even if they have done nothing wrong.

Any probe by HMRC will be time-consuming and costly, and businesses need to ensure that they are prepared. Making sure records are up to date and in order is essential, as well as full cooperation with any HMRC staff involved in the enquiry.

Businesses are increasingly opting to take out insurance against the cost of an investigation, to protect themselves should the process stretch out over an extended period. Enquiries have been known to last for several weeks, or even months, resulting in considerable disruption and loss of revenue.

Underpayment of VAT has been identified as a key area of focus for the Revenue over coming months, following concerns surrounding avoidance by sellers on Amazon, Ebay and other online retail platforms. It has been estimated that VAT evasion in online shopping currently costs the economy up to £1.5bn per year.

It was also announced in the Spring Budget that the government will be taking steps to crack down on overseas traders who avoid paying tax on UK sales.

Underpayment of VAT is quite clearly on the Revenue’s radar and all SMEs should therefore be prepared for a focus on any activity in this area.

An unnecessary tax investigation is an unwelcome burden whatever industry or sector you work in.

Should such a situation occur, you may benefit from tax investigation fee protection which can help cover our accountancy fees to defend you.

 

If you are subject to a tax investigation or wish to take advantage or any one of HMRC's campaigns or even make a voluntary disclosure, we can help you to manage the enquiry to ensure the very best outcome.

Speak with one of our experienced team today

If you like this article and would our FREE updates sent straight to your inbox then subscribe to our monthly newsletter

Subscribe

Get in touch

To find out more about how we can help you or your business, call us on 0808 144 5575 and speak to a member of our team. Alternatively use our contact form to send us a message or arrange a callback.

CALL 0808 144 5575

or

Contact Us

All content © 2015 Armstrong Watson. All Rights Reserved. Website by Simon Pighills.

Armstrong Watson LLP is a limited liability partnership registered in England and Wales, number OC415608. The registered office is 15 Victoria Place, Carlisle, CA1 1EW where a list of members is kept. Armstrong Watson Accountants, Business & Financial Advisers is a trading style of Armstrong Watson LLP. Armstrong Watson LLP is regulated by the Institute of Chartered Accountants in England and Wales for a range of investment business activities.

Armstrong Watson Audit Limited is registered to carry on audit work in the UK and Ireland by the Institute of Chartered Accountants in England and Wales. Registered as a limited company in England and Wales No. 8800970. Registered office: 15 Victoria Place, Carlisle, CA1 1EW

Armstrong Watson Financial Planning Limited is authorised and regulated by the Financial Conduct Authority. Firm reference number 542122. Registered as a limited company in England and Wales No. 7208672. Armstrong Watson Financial Planning & Wealth Management is a trading name of Armstrong Watson Financial Planning Limited. Registered Office: 15 Victoria Place, Carlisle, CA1 1EW