Small firms beware, the taxman cometh

SMALL businesses in Oldham are warned that the tax inspector has them in his sights.

Steve Andrew, who runs small-business tax and accountancy firm TaxAssist Accountants in Middleton Road, Royton, reports that HM Revenue and Customs (HMRC) are expected to “increase massively” the number of tax investigations they make, in a bid to reduce the tax gap — the difference between tax raised and what is thought to be owed — by £4 billion at the end of this financial year.

He comments: “Cash businesses across Oldham such as private taxi firms, pubs, corner shops and takeaways, are particularly vulnerable and should ensure they have all their books in order and answers ready.

“The investigation insurance company, CCH, has already seen an explosion in new cases, with new claims up 82 per cent compared with the previous year and this is expected to ramp up even more in the next few months.

“Business owners should not take this attack on their legitimate earnings and hard work lying down. If they ensure they have all the right procedures, records and proof of income and expenditure in place, they can show the tax inspector the door.

“They should also ask their accountant for fee protection insurance to cover the costs which could be run up in fighting any claims from HMRC.”

He urges Oldham’s small business to follow five golden rules when the tax inspector calls:



Challenge any part of the tax assessment you know is wrong.



Answer all correspondence from HMRC within their deadline – or fully explain why if you need more time.



Anticipate the inspector’s questions — if there is anything to declare do so early;



Ensure your tax adviser is experienced in negotiating with HMRC.



Appeal against any HMRC order to the independent commissioners within 30 days and go to the Tax Tribunal if you have a particular grievance.

Businesses under investigation can see any documents held on them by calling the HMRC Data Protection Unit on 0191-225 7575.