Compliance teams at HM Revenue & Customs (HMRC) are shifting their focus towards small and medium-sized enterprises (SMEs) – many of which are unprepared for close scrutiny, according to reports.
The news comes after a Freedom of Information request revealed that an ongoing crackdown on SMEs had brought in an additional £468million in tax for HMRC, while the tax authority raised £3.5bn from SME-focused investigations into unpaid VAT during the 2014/15 financial year.
According to reports, the Revenue estimates that SMEs represent more than half (51 per cent) of the UK’s tax gap – with larger businesses thought to represent 25 per cent in comparison.
But experts have warned that many of the UK’s smaller businesses are woefully unprepared for HMRC’s increased scrutiny.
In recent weeks, the Revenue has also announced that it is cracking down on individuals who generate extra income from home via websites such as eBay and AirBnB.
HMRC warned that individuals must declare such earnings in their self-assessment tax returns before the 31 January – or else face potentially very heavy penalties and fines.