Tax Fraud Costs The UK Economy £16bn A Year
So watch out if you run a small business ...
Yes, £16bn. That's £16,000,000,000! All this is according to the National Audit Office (NAO) who issued a report in December 2015 that concludes the taxman is losing £16bn a year to tax fraud ...
Billions are being lost to tax fraud and HMRC have been told to do more to prevent it.
Two groups - smaller businesses and criminals - are responsible for 17 of the 21 biggest tax fraud risks, according to HMRC. Of these, eight relate to organised crime and nine involve medium-sized, small or micro-businesses.
"HMRC believes these businesses are responsible for tax losses of £17bn in recent years!"
According to the report, the taxman met its target to increase prosecutions by 1,000 a year by 2014/15, but it was found it needs to better prioritise the cases in which it pursues criminal investigation.
Interestingly, HMRC cannot demonstrate the 1,000 figure was the right number - should it have been much bigger? However, HMRC will generally use civil investigation methods rather than criminal investigation methods as this helps to keep their costs down, which means we can expect them to continue to only criminally prosecute the most extreme cases.
What we do know is that additional funding and the new measures contained in the Summer Budget and Autumn Statement are allowing HMRC to crack down further on the hidden, or black economy.
"This means we can expect more prosecutions and more businesses being investigated!"
The NAO report has highlighted that HMRC needs to use its data and analysis tools more effectively to improve the way it tackles fraud. Very interestingly, the NAO report suggests that the taxman is going to do more to find ways to prevent losses happening in the first place.
Until next time ...
If you're at all worried about HMRC starting a tax investigation for your business, then call me on 0333 335 0422 and let's see how JVCA can help you.
I've been an accountant in and for business since 1987 and have a wide experience of consultancy, audit, accounts, taxation and wealth planning work from individuals and small businesses to multinational corporations and charities.
My eclectic interests in growing and developing business span a number of areas … and can be summarised as strategic business advice and tax saving advice.
I have worked with the Chamber of Commerce to deliver courses for people about starting up in business and have lectured about tax for a major accountancy practice and for Milton Keynes College.
I relax by reading fiction and by getting away from the office in a campervan.