More than £3.4 billion of additional VAT revenue has been collected from small and medium-sized enterprises (SMEs) in the last year following tax investigations, according to the latest HM Revenue & Customs (HRMC) data.
This amounts to 49 per cent of the additional revenue brought in by HRMC’s compliance teams in the 2016/17 tax year, which is up by four per cent on the previous year’s figures.
VAT has been a regular target for the Revenue over the last few years and the department has doubled its efforts to crack down on tax evasion perpetrated by SMEs by expanding its compliance operations.
This has increased pressure on SMEs to get their VAT affairs right but with constantly changing rules in regards to the Flat-Rate Scheme, VAT on digital sales and a whole host of other changes, businesses are finding it hard to keep up.
To complicate compliance matters even further, HMRC continues to expand its super computer system, Connect, so that it has the ability to find discrepancies after being given access to files held by banks and other financial institutions based in British Overseas Territories.
The system is also believed to be able to search social media and other unconventional sites to identify possible signs of VAT non-compliance.
Whilst the team at UK VAT Advice actively discourages any form of VAT evasion, there are certainly cases where companies have inadvertently found themselves facing an investigation by HMRC.
To ensure this doesn’t happen to your business, our VAT team can conduct a thorough review of your affairs to highlight any weaknesses and then actively manage your VAT reporting to ensure you aren’t subject to investigations.
Should you already be in the position where HMRC are investigating we can also represent you at VAT Tribunals to ensure the best case is put forward. To find out more about our VAT services, please contact us.