HMRC have published their 2022/2023 “Tax Gap” estimate, which is the difference between the amount of tax which should have been paid and what is actually paid.
Although a factor, the tax gap is not solely down to avoidance. More commonly, people make a genuine error in calculating their taxes or rely on past information and guidance which may be outdated. The gap is also due to some businesses facing financial hardship in the difficult economic climate.
While the tax gap has fallen to an all-time low of 4.8%, one exception is Corporation Tax, especially for small businesses which now makes up 60% of the Tax Gap and amounts to £98.1 billion of lost tax in 2022/2023, up from £77 billion in the previous year.
With the new Chancellor likely to focus on closing the Tax Gap to raise revenues, small business owners can expect increased compliance activities directed towards them and enquiries from HMRC.
HMRC attributes the failure to take reasonable care as the main reason for non-compliance, which includes seeking appropriate and timely advice.
With the tax landscape becoming increasingly complex, you must speak to an advisor before undertaking any transaction. However small, and even if you feel that you are familiar with the tax issues, there may have been changes in legislation or case law which will have a bearing on the interpretation of the rules and could result in unexpected results. If you have already done the transaction and triggered a charge it is too late to put it right!
If you need advice on Corporation Tax, especially in the context of transactions our specialists are here to help. We can assist in situations where you think you may have made a past error and help you put things right, by making a voluntary disclosure to HMRC. People often do not realise that HMRC operates a “time to pay” arrangement in case of genuine financial difficulty.
If you have any worries or concerns regarding your Corporation Tax position, we can advise you, whatever the situation. It is far better to take a proactive approach to your tax affairs than hope that a problem will disappear! Contact Pauline Hudd and our tax team today at info@wildercoe.co.uk.
