HMRC to ramp up small business inquiries

An onslaught of tax investigations will hit smaller businesses this autumn, in an initiative that tax inspectors are calling a "dash for cash," advisers are warning.

According to Abbey Tax, the coming months will see an upturn in the number of small firms being scrutinised under HM Revenue & Customs' inquiry process.

Designed to help the government plug the £158bn hole in the public finances, the offensive follows other revenue-raising schemes, like the NDO for offshore savers.

There is some evidence that the tax clampdown, expected to focus on a specific aspect of a small firm's affairs rather than its various liabilities, is already underway.

Pointing to annual figures, Abbey Tax said the number of insurance claims filed by accountants - triggered when a client receives an HMRC inquiry - doubled in June.

Reflecting even on the three months running up to the end of the financial year, the firm's figures also show such claims grew 46% against the same period a year ago.

But David Marples, a group manager at Abbey Tax, explained that HMRC's clampdown on small firms, which he told CUK includes the self-employed, would begin in earnest over the current and fourth quarter.

"We expect the number of HMRC inquiries into small businesses to go on increasing over the coming months," he said.

"The inspectors we have spoken to have told us they are being tasked to bring in as much money as possible, as quickly as possible."

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