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How does HMRC's latest crackdown affect businesses?

Date Added: 07/11/2013  

HM Revenue and Customs (HMRC) is regularly moving the goalposts when it comes to paying tax - or at least that's how it can feel to business owners.

While company bosses understand that HMRC has to do all it can to collect the right amount of tax, the fact remains that most firms pay up on time and hand over the money they are meant to. It can therefore sometimes seem as though those businesses doing things the right way are being punished for the mistakes made by other types of firms, which appears to be unfair.

HMRC recently announced that the tax gap has fallen steadily over the last six years and in its latest figures has come down from 8.3 per cent of tax due in 2005 to 2006 to 7.1 per cent in 2010 to 2011 and seven per cent in 2011 to 2012.

Exchequer secretary David Gauke stressed that the vast majority of small to medium-sized enterprises (SMEs) have paid their tax on time, but noted how it is the job of HMRC to "challenge non-compliance fiercely, protecting money that would otherwise be lost".

One way HMRC has changed the tax system recently is through the introduction of Real Time Information, which caused a wide range of issues for small firms in particular when it was launched earlier this year.

Writing for Computer Weekly, Mark Paraskeva, chief executive of SME Division at IRIS Software Group, said many small businesses are still having issues complying with the new legislation even six months later. He added: "Feedback we have received is that since HMRC updated the tool earlier this year, the system requirements have been increased, rendering many employers' computers incapable of running it."

The government has also announced recently that HMRC has teamed up with the Cayman Islands in order to reduce incidences of tax avoidance there, while a new approach to Business Records Checks was confirmed earlier in the month.

It is claimed by HMRC that these checks help and encourage SMEs to improve the standard of records they keep, but companies may find this is actually more of a hindrance than a help.

Staying on the right side of HMRC is vital - as was demonstrated with the recent news more than £100 million has been seized from tax evaders since 2011 - but many firms are finding it increasingly difficult to keep up with the various compliance standards required of them.

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