SMEs feel ‘targeted’ by tax investigations

Small businesses feel they are unfairly targeted by tax investigations, according to a report commissioned by HMRC.

Research conducted by insurance firm PfP revealed that 52% of small businesses think tax investigations are too intensive.

Additionally, 56% don't believe that HMRC does enough to minimise the cost, time and effort that investigations require.

In April 2018, the Treasury select committee heard that 1 in 10 small businesses are under tax investigation at any given time.

These investigations form a part of HMRC's efforts to clamp down on tax avoidance, as the authority believes that small businesses were responsible for 41% of the tax gap in the 2016/17 tax year.

However, PfP argued that smaller businesses are an "easier target" than larger organisations, and are often disproportionately affected by the disruption that investigations cause.

Kevin Igoe, managing director at PfP, noted that many of these businesses "do not have the resources at their disposal to manage an inquiry or negotiate with inspectors".

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