Figures from tax officials suggest small businesses accounted for 56% of the tax gap in a single year, worth £20.2bn, the law firm said. Pinsent Masons.
This number has increased for the fourth year in a row, with 40 per cent (£12.8bn) of the tax gap in 2017/18 believed to be due to small businesses.
The tax gap is what, in theory, HMRC should and will be levied.
“HMRC is really shifting its focus to small businesses. But we still have a lot of work to do for small businesses.”
He added that HMRC’s focus on large corporations and high net worth individuals meant less attention was paid to small businesses. Anecdotally, investigations into small businesses often take a long time to complete, and problems can persist for years.
“For example, there are cases where small businesses continue to use tax avoidance schemes for years after they have been virtually wiped out among large corporations and the wealthy,” he said.
See also HMRC tax audits: 8 reasons HMRC should audit your business – here are some of the common triggers associated with HMRC tax audits and how to reduce the chances of them.
“It should not be a surprise to see non-tax compliant SMEs being scrutinized by HMRC in the coming years. Based on these figures, it is clear where HMRC is headed. It would be a very good idea to receive and resolve the issue proactively.”
The tax gap remained stable at 4.8% (£35.8bn) of the total tax payable in theory, the same as last year.
latest government figures Measuring tax differentials The report found that SMEs accounted for the largest share of the tax gap by group at 56% (£20.2bn), followed by criminals (£4.1bn), large business (£3.9bn) and medium-sized companies (£3.9bn). pound). 3.8 billion). Wealthy individuals account for 5 per cent (£1.7 billion) of the tax gap, while all other individuals account for 6 per cent (£2.1 billion) of the tax gap.
When measured by tax type, income tax, national insurance premium and capital gains tax account for 35 percent of the tax gap. The VAT gap continues to narrow, from 14% (£11.9bn) in 2005/6 to 5.4% (£7.6bn) in 2021/22.
Failure to exercise reasonable care (30%), negligence (15%), evasion (13%), legal interpretation (12%), criminal activity (11%) and non-payment (9%). . According to the report, the main drivers of tax disparity behavior include:
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