No compromise on legal action for business, warns HMRC
Monday, 23 July 2018
HM Revenue & Customs’ (HMRC) Executive Chairman Edward Troup has warned taxpayers that HMRC will not compromise when taking legal action against them. Taxpayers can therefore expect HMRC to maintain their increasingly hard-nosed attitude in any upcoming investigation.
Troup warned that HMRC would look to take tax disputes to court wherever necessary. He also stated that HMRC would not settle outside of court for anything less than what they think they are owed and would not split the bill on any outstanding payments.
What this means is that if you can’t persuade HMRC at an early stage that you’re paying the right amount of tax they may be relentless in their pursuit. This makes it more important than ever to have a tax professional to help you in your dealings with HMRC.
This warning comes as HMRC look to increase the revenue generated through their compliance work and close the tax gap. This is the difference between the amount HMRC think they are due and what they actually collect. Last year, the tax gap increased to £34 billion, up from £33 billion in 2014/15.
HMRC believe small and medium sized enterprises (SMEs) were responsible for 46% (£15.5 billion) of the overall tax gap in 2015/16.
SMEs are often viewed as an easier target by HMRC as they are unlikely to have the resources to employ in-house tax specialists who can close down or limit tax investigations.
Indeed, new data shows that HMRC collected £504 million in extra revenue from investigations into the tax affairs of SMEs in 2016/17, an 8% increase on the £468 million it collected in 2015/16.
Tax investigations can be costly, disruptive and stressful for SMEs, and may even result in long-term reputational damage.
With HMRC set to ramp up investigations following the introduction of the Criminal Finance Act in September 2017, more and more businesses are taking out tax investigation insurance to protect themselves. To find out more, please call 0330 024 0888 or email firstname.lastname@example.org.