Hentons logo

SMEs feel the squeeze

SMEs are set to feel new pressure from HMRC as it increases funding to its 'Fraud Investigation Service' to £204 million in the current financial year, warns accountancy firm Hentons.

The leap of almost 10 per cent will fund more specialist tax and criminal justice experts.

HMRC has seen an increase in raids on suspected tax evaders of over 30 per cent in the five years to March 2017, as HM Revenue & Customs stepped up its pursuit of white-collar fraudsters.

From 30 September legislation will be introduced that creates a new corporate criminal offence of failure to prevent the facilitation of tax evasion. The laws contained in the Criminal Finances Act 2017, will make businesses liable if an employee criminally facilitates tax evasion while acting in that capacity for the firm, even if the management of the company was not involved or aware of what was going on.

Gary Clarkson, director of tax strategies at Hentons, said: “If a business owner is raided by the HMRC they often go into a blind panic. In this situation, both sides have to follow the rules, and a business owner can take steps to mitigate the impact.”

Hentons claims it has seen an increase in the number of raids across the leisure and tech sectors, with restaurants and bars, particularly at risk.

Clarkson said: “HMRC can often pick on one particular practice and apply a ruling across thousands of business. We saw this with limited liability partnerships, where some operators abused this method of company incorporation to avoid tax, but it caused problems for lots of other businesses.”

Hentons advising seeking professional advice immediately if a business owner thinks they could be at risk. Mr Clarkson advises the process has to be fair and tax inspectors can be held to account just as any public sector service.

Mr Clarkson is an expert on tax issues having worked as an inspector of taxes with HMRC for over 20 years and now helps businesses and entrepreneurs with their tax affairs.

Hentons tips if the taxman comes knocking:

1) Audit which staff need to be trained and deliver the required training. Raids are generally around 6am, so it's cleaners and security staff.

2) The raid warrant is geographically based so they can only search things at the address shown on warrant.

3) For evidence to be legally useful HMRC must talk through every item seized and get sign off.

4) Legally privileged documents can't be taken.


Notes to editors:

About Hentons

An ambitious Charted Accountancy, Hentons has clients ranging from medical professionals and property investors to manufacturers, academies and charities. It offers accounts, audit, business strategy and tax advisory services with a partner led approach for all its clients.

For further information contact:

Gary Clarkson: garyc@hentons.com 0113 234 0000

Nathan Lane: 07447 921654 or 0113 3571250

back to top