It’s always important for businesses to stay on top of their tax. That’s especially the case when Her Majesty’s Revenue and Customs (HMRC) is clamping down on corporation tax and VAT i.e. underpaid tax. The latest figures suggest that HMRC is doing exactly that, with a 12 percent rise in revenue from business tax investigations.
Read on as we take a closer look at the figures and how to make sure your company doesn’t fall foul.
Almost £10 billion extra revenue
According to research by law firm Pinsent Masons, HMRC collected an extra £9.8 billion from tax investigations into the largest 2,000 UK businesses in 2017/18. The record-high figure is a huge rise of 12% over £1 billion from last year’s total of £8.7 billion.
Where does it come from? The two biggest sources cited in the research are £6 billion from tax investigations into VAT plus £2.6 billion from corporation tax which had been underpaid.
Homing in on tax underpayment
According to Pinsent Masons’ Stuart Walsh, the rise in down to HMRC’s new focus on the underpayment of tax by businesses in the technology and financial services sectors. Bigger UK and foreign businesses are going to find themselves under continued scrutiny from HMRC over the next year, he explains.
The new Government’s spending pledges mean HMRC and the Treasury will be under pressure to raise more money. The view is that big businesses are not being put off investing in the UK because of the tax environment so that gives HMRC scope to continue to push very hard wherever it sees the possibility of underpaid tax.
What this means for UK businesses
With VAT likely to remain a flashpoint for HMRC over the next few years, according to Walsh, it’s more important than ever for UK businesses to have their taxes in order. Not least because HMRC believes a massive 9.1% of all VAT is unpaid at present.
Given that HMRC is cracking down on VAT, it looks like a case of when’ rather than if’ for non-compliant businesses. Underpaid VAT or corporation tax can come as a massive shock to your finances, requiring a large one-off payment, or several payments, to make up for your errors. That’s not even mentioning the potential for extra fines when payments are missed.
It’s much easier for businesses to pay the right amount of tax all year round, so you can rest assured there will be no unexpected payments or penalties.
Talk to our tax experts
UWM is a team of Leeds-based accountants with over 30 years of industry experience. We help local Leeds companies and businesses across the UK stay compliant and tax-efficient while maximising their bottom line.
If you’re looking to shore up your VAT or corporation tax, we’re always on hand to help. Get in touch with our team on 0113 231 0202 to discuss your finances in more detail.
