HMRC tax investigations into SMEs are ‘too intensive’

New research commissioned by HMRC has revealed that more than half of small and medium-sized enterprises (SMEs) believe that HMRC’s tax investigations are ‘too intensive’.

Insurer Professional Fee Protection (PfP), who undertook the research, found that 52% of SMEs believe that tax probes are ‘too rigorous’, while an additional 56% think HMRC investigations are ‘too costly and time consuming’.

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PfP warned that tax investigations often prove to be disruptive for SMEs, with many resulting in significant professional fees.

Commenting on the issue, Kevin Igoe, Managing Director of PfP, said: ‘Small businesses think they are getting rough treatment from HMRC and are making this clear. [They] are often at the receiving end of lengthy tax investigations, which can be very disruptive. Many of these businesses also do not have the resources at their disposal to manage an inquiry or negotiate with inspectors.’

According to the research, 48% of SMEs ‘do not believe that HMRC’s penalties are fairly distributed’, and many think that small firms are ‘unfairly targeted’.

PfP also revealed that, in 2016/17, HMRC’s investigation teams collected an additional £16 in taxes for every £1 spent on investigatory staff.

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