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Chartered AccountantsFirms should be prepared for HMRC to ramp up significantly its efforts to close the VAT gap, following the release of new figures that show that the UK’s VAT gap has grown by 25% in the year to April say Harris & Co accountants Northampton.
The VAT gap – the difference between the amount of value added tax HM Revenue & Customs receives and the amount it believes it should be paid – jumped from £10.3 billion to £12.9 billion in the last year.
As a consequence, we expect HMRC to track down the missing VAT by increasing tax investigations of clients operating in cash-culture sectors that are heavily populated by sole traders and SMEs.
Some SMEs have already been under HMRC’s spotlight for participation in VAT avoidance schemes, such as a scheme involving car repairs done under warranty which was defeated at the Supreme Court earlier this year, or the exploitation of Low Value Consignation Relief by online retailers to distribute goods into the UK without incurring VAT.
