HMRC VAT crackdown nets estimated $3.4bn

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The HMRC crackdown on tax evasion in the UK has extended to small and medium businesses (SMEs). According to PfP, they have targeted SMEs not paying their fair share of VAT. They estimate that an additional $3.4bn in revenues has been netted for the Exchequer in the tax year 2016/17.

Kevin Igoe of PfP says: “Over the years HMRC has widened its net – cracking down on smaller businesses, as well as larger organisations. It’s clear from the high tax take that HMRC have found investigations into SMEs to be fruitful, and therefore it is likely that this focus on smaller organisations will continue. In order to avoid scrutiny from the revenue, SMEs must make sure they are filing their returns correctly, so as not to incur a hefty fine. VAT can rake in a lot of extra revenue for HMRC, and therefore the taxman is prepared to use all means at its disposal.”

It is reported that HMRC is using several tactics to gain this extra revenue from SMEs. Firstly, there are making use of their Connect software. This is a database that can trawl personal and commercial financial information to identify those that are potentially underpaying and warrant investigation.

They have also been granted additional powers with relation to the Connect system. It has been granted access to files held by banks and financial institutions located in British Overseas Territories.

Secondly. PfP reports that HMRC are more proactively investigating SMEs that they discover to have made mistakes in VAT filings. That can mean a routine records check or more drastic interventions such as a raid.

Dealing with VAT can be one of the more onerous responsibilities of a small business owner but the thing to remember is that VAT is never yours: you collect it on behalf of HMRC.

2 Responses

  1. Since when did we switch to dollars in the UK?

    Are we to have Abe Lincoln on our banknotes?

  2. VAT is never yours: “you collect it on behalf of HMRC”. YES I know and I pay through the nose to collect it for them, while they let the large companies of with murder it is criminal.
    VAT is pain in the backside.

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