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HMRC announces 39% revenue rise from investigation increase

Revenues for Her Majesty’s Revenue & Customs are up 39 per cent, thanks to an increase in the number of investigations into small businesses.

Small firms, sole traders, freelancers, and contractors have all ‘helped’ to increase HMRC’s revenues to a new sum of £434 million over the course of the last tax year, the taxman said. This was £123 million more than HMRC collected in the 2010-2011 tax year, it added.

However, this isn’t to say that small firms are intentionally pulling the wool over the eyes of the tax authority. In fact, experts say that SMEs and sole traders have a higher likelihood of making completely innocent mistakes when it comes to calculating their taxes, which leads to a higher percentage of smaller firms running afoul of HMRC when compared to larger businesses.

It may be a trial for a small business to employ an accountant full time in order to manage a tax investigation by HMRC as well. The unfortunate side effect, at least for any firm that doesn’t rely upon a contractor accountant, means that these small firms or sole traders often unnecessarily concede to the taxman’s demands for additional tax payments.

HMRC spoke out against the accusations that it is targeting smaller firms that are ill-equipped to deal with such a tax investigation, remarking that there is no conspiracy to plunder the coffers of small business owners because they are ripe for the picking. The taxman also took issue with the characterisation that it sees these sole traders and SMEs as ‘easy targets.

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