The Tax Man Cometh – Are You Being Investigated By HMRC?
HMRC recently revealed that one in ten small businesses are under active investigation – that’s over half a million companies across the UK.[1]
The UK tax code is the longest and most complicated in the world, having ballooned to over 20,000 pages.[2] It currently sits at around 10 million words – that’s more than 22 times the length of The Lord of the Rings trilogy, plus it’s far more dry and confusing.
While larger companies can employ teams of people to makes sense of and navigate this labyrinth of legal jargon, smaller employers can be hard pressed to maintain compliance. Similarly, where large corporations can shrug off the costs of an investigation, or even lengthy legal battles, innocent small businesses can really struggle.
The more cynical among us may conclude that HMRC is effectively incentivised to go after smaller businesses, as while the toll extracted may be smaller, they present a much easier target.
Tax investigations can be very stressful for business owners. They require expensive legal advice and assistance to exonerate, and absorb a considerable amount of time, putting your business under strain
Being under investigation is more often than not due to an oversight or error rather than deliberate tax evasion. A simple clerical error can have the HMRC scrutinising the last 4 years of your business, an incomplete disclosure can result in them going back as far as 6 years, and if they believe an individual or company has engaged in fraud or deliberate negligence they can investigate up to 21 years’ of paperwork.[3] An average HMRC tax probe takes nearly three years to complete, with reports suggesting that they are becoming more dogged, refusing to back down on disputed technicalities even when their case is far from solid.[4] Costs can easily climb, from penalties that can double the amount of money HMRC believe they are owed in tax, to lost working hours and productivity, plus the expenses of accounting and legal advice.
It’s a near certainty that the tax code isn’t going to get any simpler, nor the taxman any less zealous. HMRC do not comment on what triggers investigations, but it is speculated that mistakes and irregularities in PAYE are one of the most common causes.
Rather than risk lengthy and resource draining investigations, you can easily ensure your payroll is in full compliance with HMRC requirements by outsourcing it to Wagemate. We offer a secure and hassle-free, fully managed payroll service. We won’t just save you considerable time and money, but also ensure that your business is fully in line with PAYE and pension regulations, no matter how complex and inscrutable they become. You can eliminate the worry of an investigation by HMRC and streamline your business effortlessly by trusting in our team of friendly experts.
For more information, visit our article about staying compliant and getting ready for a tax audit here:
https://wagemate2020.wpengine.com/how-to-avoid-getting-caught-out-by-an-hmrc-audit/
Speak to Wagemate today on 03330 102 102 or info@wagemate.com
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[1] Prosser D. Taxing times for Britain’s SMEs. Forbes. August 2, 2018. https://www.forbes.com/sites/davidprosser/2018/08/02/taxing-times-for-britains-smes/#77adb3503dae
[2] Heath A. The chancellor must make it his mission to simplify our crazy tax system. The Telegraph. January 27, 2016. https://www.telegraph.co.uk/news/politics/georgeosborne/12126263/The-Chancellor-must-make-it-his-mission-to-simplify-our-crazy-tax-system.html
[3] Finance Act 1998. Legislation.Gov https://www.legislation.gov.uk/ukpga/1998/36/schedule/18
[4] McCance D. Average HMRC tax probe takes almost three years. Economia. January 15, 2018. https://economia.icaew.com/news/january-2018/average-hmrc-tax-probe-takes-almost-three-years