Contractors should be aware that HMRC’s focus on the VAT charged by small and medium sized companies, including personal service companies, is as strong as ever according to recent findings.
A story in this weekend’s Mail on Sunday indicated that VAT now accounts for 49% of the extra tax HMRC takes from investigations into these companies.
The data the newspaper saw and reported on was for the tax year to April 2017, and was put together by PfP – a tax investigations firm.
Interestingly, the actual amount of VAT being taken isn’t increasing, despite the percentage rising.
At one point, firms who broke VAT rules were brining in £3.5 billion for HMRC. PFP’s research found that the last tax year actually saw £3.4 billion accumulated this way.
But the fact that these investigations are bringing in significant income to HMRC means it’s likely the organisation’s focus on small and medium sized companies such as personal service companies will not let up any time soon.
It’s therefore vital that contractors ensure their taxation is in order, and avoid slip ups that could see HMRC calling with a vengeance.