Hmrc’s investigations into small businesses generates an average £18,400

HMRC’s investigations into small businesses generates an average £18,400

HMRC’s investigations into small businesses generates an average £18,400
HMRC has increased its take from investigations into individuals and small businesses to an average of £18,400 per investigation, up from £17,500 last year, according to new data from UHY Hacker Young.
The accountancy firm said HMRC – which believes £35bn in taxes went underpaid in 2019/20 alone – is looking to raise as much as they can from investigations as they seek to make up for revenue lost during the pandemic, said Phil Kinzett-Evans, a Partner at the firm.
He said: “HMRC is looking to squeeze as much money as they can from every investigation. Those who avoid tax are now facing larger penalties as HMRC looks to make up for income lost during the pandemic.”
He said that many upcoming investigations by HMRC may be related to Covid grants, specifically those small businesses and individuals who did not report receiving these funds on their tax returns.
Grants such as the Self-Employment Income Support Scheme and local restrictions support grant are taxable, and HMRC will be seeking to ensure no-one has underreported income from those schemes.
He added that small businesses and individuals are often seen as easier targets for HMRC, as they do not have access to specialist legal and tax advice. Without professional support it is much more difficult to challenge an investigation.
HMRC may look for irregularities in a business’s tax returns, such as when a business which works in a cash heavy sector reports low income from cash in its declarations. If HMRC finds a discrepancy, then it may lead to an investigation, which could mean a substantial fine or potentially jail time.