HMRC clampdown raises £39.5bn – but at what cost?

We are a sizeable local practice, but pretty small fish overall, and our client base is generally small to small-medium businesses of all shapes and sizes.

I have noticed a significant reduction in enquiries, especially when you take out the 'special interest' ones where they are asking about a particular technical issue. And then on the remaining enquiries I feel HMRC have been entirely reasonable in nearly all cases, and have not taken the case further when there are items which would take significant time, on both sides, to prove either way. If the overall picture looks right then they have promptly closed the enquiry.

Then again, I do take care to ensure that the accounts look reasonable, and that we have explained items like capital introduced, large repairs, unusual items etc in the additional information boxes. And on Ltd cos we analysis sundries etc into other appropriate headings (i.e. if there's £5437 Health and Safety Consultancy we set up a heading call that etc rather than leave it in sundries). Not rocket science, but best practice to protect your client's interests.

I am not saying we are any better than lots of other firms, it's just I get very annoyed at the constant provocative headings and sub-headings in many of these stories.

There seems to be £11,875M missing.  The columns do not add up to the totals at the bottom.  Is there some other area of interventon that has been ommitted?

Without a shadow of a doubt, the number of SME enquiries had fallen dramatically.

First of all, this is HMRC's declared policy :

Second, numbers of staff able to do it have fallen off

Third, as a specialist in the area I can assure you that the numbers have reduced by at least 50% and probably more over the last two years.

So it is not the time to try to put the frighteners on small business.

Pity the benefits office are not as strict with payments to layabouts and scroungers. But that might upset Labour Voters???

While stupid figures are bandied about (£120Bn lost through evasion and avoidance) there will always be those that believe our business is so corrupt that there should be another 200,000 tax inspectors to collect this mythical sum.

Listen PCS TAX AVOIDANCE in whatever shape or form is LEGAL and until you come to terms with that not I nor many of my colleagues will treat your arguments with any creedance.

It is a real pity that the sort of effort put in to collect £39.5Bn has not been put in to stop welfare cheats and illegal immigrants etc. etc.

I was told off and censored on AWeb for defending my use of a mild swear word (directed at a product, not a person), but surely the preceding post, with this comment, is far more offensive, not to mention off-topic.  Makes you wonder how the censors' minds work.

Spoke to HMRC today on behalf of a fellow accountant suffering from ill health and their client is being taken to the cleaners.  A CIS rebate of tax led to the investigation and every single thing is being queried.  Client didn't help himself with some rather strange claims (subsistence with kids food on plus occasional missing invoices etc) but the final assessment contains a massive error which results in an overdemand for tax of well over £2k. 

It put the wind up me as a fellow practitioner to make sure my clients are whiter than white.

Headlines:

• UHY Hacker Young says stringent regimes are putting SMEs under pressure
• small businesses are suffering under [HMRC's] ‘no mercy’ approach, argues UHY Hacker Young.
• you have to ask whether smaller businesses really deserve all the scrutiny they receive

Detail:

• Non-compliance investigations into small businesses and the self-employed yielded £359 million of additional tax last year, a figure that has declined over the last two years.
• the percentage of uncollected tax written off as doubtful to be collected had risen from 23% in 2006 to 40% in 2009

The figures:

Corporation tax enquiries - small  businesses - the amount of tax collected in 2008/09 was actually 5% LOWER than in 2006/07

Self assessment business enquiries - the amount of tax collected in 2008/09 has continued the consistent fall of recent years and is now 14% LOWER than in 2006/07

I'm afraid the detail and the figures do not seem to support the firm's press release headlines.

Mark

Good for HMRC, a move in the right direction ! There are billions missing in evaded tax from small business and more needs to be done !

Those that comply with the rules need supporting by leveling the playing field with the criminal element.

Yes tax evasion is criminal.

Like the above poster, I agree HMRC are usually fair, and we have no problem with them making enquiries, even though these should be directed at firms that have little regards for the rules.

We have some fractious technical arguements but that is par for the course.