HMRC would argue that all businesses have their taxation affairs scrutinised equally and fairly, but a cursory glance at some recent statistics make us wonder.
In 2011 tax inspectors raided 499 homes and business premises, a 155% increase on 2010. The amount of extra revenue raised through investigations has soared to £434 million a year.
It is evident that HMRC has significantly increased its targeting of small business by utilising both new technology and implementing a whistle-blowing hotline that received 74,000 calls last year.
You might wonder why anyone would be tempted to report a friend or colleague in to HMRC, but the practice can be profitable as HMRC paid out £400,000 last year, with some awards reaching £20,000.
Looking at the technological advances, HMRC have produced an online ‘portal’ for ‘whistle-blowing’ but more importantly have invested in a £45 million computer system called Connect. This system links dozens of databases, for example DVLA and Land registry and has been credited with raising an additional £1.4 billion in revenue.
All of the above is in addition to ‘old fashioned’ techniques such as looking at local papers, social networking sites etc that still provide masses of information used to trigger tax enquiries.
Unfortunately, sometimes HMRC get their calculations wrong and accuse innocent taxpayers, burdening them with the costs and worry of potentially lengthy and intrusive enquiries into their personal affairs. In these circumstances it is vital that a reputable form of accountants is employed who understand how HMRC work, and can ensure that any enquiry is concluded as quickly, efficiently and fairly as possible. For more information of HMRC and how to defend/avoid tax enquiries contact your local Burgis & Bullock office on 0845 177 5500 or using the online form.