SMEs warned of tax fines

Small and medium-sized enterprises (SMEs) have been warned that they need to stay on top of their taxes, especially as HM Revenue & Customs (HMRC) has increased its focus on smaller companies.

National accountancy group UHY Hacker Young has revealed that SMEs netted HMRC £434 million in extra tax and fines in the 2011-12 tax year, marking a significant increase from the £311 million collected in the previous tax year. It is worth noting that these figures are on top of the taxes already being paid by these businesses.

Roy Maugham, tax partner at UHY Hacker Young, commented: “HMRC has been set a challenging tax yield target by the Chancellor and small businesses have found that they are an easy target for HMRC's crackdown.

“Small businesses are more likely to make innocent errors in their tax calculations than larger businesses, meaning the small business community offers plenty of opportunity for HMRC.”

This clearly makes it increasingly important for smaller companies to keep up to date with their taxes as the taxman has a keen eye trained on their accounts. UHY added that areas like PAYE and VAT have always come under scrutiny, but that HRMC is starting to expand the areas it focuses in on to include items such as corporate entertainment and employee benefits.