£565 million more bagged from small traders by HMRC

Amid longstanding reports of more aggressive action by HM Revenue & Customs against small traders, it will surprise few clients of Guildford accounting firms like Sherwin Currid (http://www.sherwincurrid.com) to read that the taxman gained an extra £565 million in revenue from small and medium-sized enterprises last year, according to figures obtained by an adviser. The statistics showed a 31 per cent boost in additional yield from investigations into the tax compliance of small firms, compared to the previous year.

It is part of a trend of HMRC taking a harder line on small businesses since it was told by chancellor George Osborne in 2010 to draw in a further £7 billion annually from compliance activity. Since then, the tax authority has established around 40 separate task forces, to enable long and thorough investigations into individuals and businesses. These specialist groups have already gathered a total exceeding £60 million, amid reports that one task force with responsibility for tackling fast food industry non-compliance has accrued £25 million alone.

Certainly, the figures are a strong signal to small trader clients of Guildford accountants that they are bearing the brunt of the taxman's crackdowns. Although much of the media's focus has been on large corporations using such practices as profit-shifting to lessen their tax liability, HMRC's tougher stance on smaller businesses has attracted fewer headlines. Another indication of this hardened approach is the expectation that a tax force dedicated to the South Wales tourism industry, set up in July, will raise about £2.5 million.

HMRC was recently granted new powers enabling it to assess every UK business's credit and debit card payments to expose those traders failing to disclose all of their income, with individuals and businesses having also been named and shamed for a failure to pay tax. However, small firms' relative lack of resources compared to the larger companies makes them more susceptible to reporting and accounting errors, and the situation is no different for small traders in Guildford. Not all of them can easily afford the best quality accountants in Guildford, increasing the chances of mistakes in their tax returns and other paperwork.

Such a lack of time, money and expert help also minimises small firms' room for manoeuvre in HMRC negotiations, should they be accused of underpayment. The best advice that can therefore be given to the UK's smallest businesses is to prepare well and think ahead. The HMRC's ever-growing yield from small traders is the clearest indication yet that they must keep their tax affairs in order - or face the consequences. With its personalised and friendly service from its well-qualified Guildford accountants, Sherwin Currid (http://www.sherwincurrid.com) is well-placed to assist small firms in the local area to operate more tax-efficiently.

Editor’s Note: Sherwin Currid (http://www.sherwincurrid.com) are represented by the search engine advertising and digital marketing specialists Jumping Spider Media. Email: info@jumpingspidermedia.co.uk or call: +44 (0)20 3070 1959 / +34 952 783 637.