HMRC are getting better at collecting tax earlier, HMRC’s most recent statistics for tax receipts show, with the additional tax yield from compliance investigations into SMEs jumping 31% over the last year, reports accountancy services Harris & Co.
Compliance investigations into SMEs raked in £565m for HMRC in 2012-13, up from £434m in 2011-12 (year ending March 31); combined self assessment receipts for July and August continued to rise with figures for the two months in 2011 were £6.82bn, in 2012 £7.12bn and this year £7.51bn. These show rises of 4.4% and 5.4% respectively from 2011 to 2012 and from 2012 to 2013.
Roy Maugham, tax Partner at UHY Hacker Young, says that small businesses are bearing the brunt of HMRC’s tougher approach to tax investigations.
‘With an ambitious target set by Chancellor to bring in billions of pounds through additional compliance, HMRC is desperate to squeeze as much money as they can from businesses who may owe tax.
‘With far smaller budgets than larger businesses, SMEs are often less likely to have accountants to manage their finances, making them prone to mistakes when filling in returns and therefore an easy target for HMRC. That also means they are in a weaker position to negotiate over allegation of underpaid tax than a big corporate,’ said Maugham.
In addition, there are indications that self-assessment receipts will also increase, accountants at Blick Rthenberg say.
Senior tax partner Frank Nash said that in particular, interim income tax payments, although normally due on 31st July, will often be collected in early August because people often pay late.
‘The proportion collected on time (in July) has increased from 74.7% in 2011, to 88.4% in 2013, reflecting increased efficiency and procedural changes by HMRC,’ he said.
Air duty receipts also had their best two months ever in July and August, Nash said, prompted perhaps by 2012"s poor summer.
Said Nash said: ‘As income tax rates have not changed over the last two years, these increases tend to corroborate earlier indications of a strengthening economic recovery.
‘Property transactions figures are being released later this month, but Stamp Duty Land Tax Receipts also issued today show £803m paid in August, compared to a more recent average of £600m. This again corroborates increased economic activity, which the construction industry has already reported,’ he said.