Small businesses used to plug tax gap

HM Revenue & Customs (HMRC) has been accused of using small and medium-sized businesses to plug the UK’s tax gap, following a report which showed an additional £468 million was generated in tax revenue by SMEs in 2016.

The figure, obtained via a Freedom of Information Request, follows on from HMRC’s announcement at the end of 2015 that small firms accounted for over half of the UK’s £36 billion tax gap.

Following this statement from the Revenue, the department faced harsh criticism from the Public Accounts Committee in a report which highlighted its failure to address tax fraud perpetrated by large international businesses, such as Google and Apple.

It stated: “HMRC’s assessment of the tax gap shows that the level of tax fraud has remained virtually static over the last five years.”

In response to the report Committee Chair, Margaret Hodge, said: “HMRC still focuses too much on small businesses – the easy wins – and lets the big multinationals off the hook.”

Small businesses have been at the heart of a number of HMRC crackdowns in recent years, including investigations into plumbers and dentists among others, and are most likely to lose out from the Revenue’s costly digital tax plans.

Link: Latest Tax Gap Data