PAYE umbrella contractors working in small businesses may find themselves in agreement with recent criticisms of HMRC made by the Association of Tax Consultants (ATT). At a time of considerable business uncertainty, with the UK economy needing small firms to prosper as never before, HMRC is set to proceed with its plan to check the business records of 50,000 SMEs across the UK over the next six months.
While the ATT endorses the spread of best practices in bookkeeping amongst small firms, the organisation nonetheless has concerns about the new initiative. Specifically, it believes that many of the HMRC staff who are lined up to conduct the current round of checks lack the knowledge and experience to do them properly, or to draw appropriate conclusions from their findings.
ATT President Simon Braidley has complained that the pressure on SMEs is being “stepped up” from all angles. “Even if a business is considered to have adequate records, it could still be subjected to an enquiry using the new ‘Single Compliance Process’.”
HMRC hopes that the new process, which involves sharing any identified risks with both taxpayer and agent from the outset, will shorten the length of enquiries and allow more firms to be checked more rapidly. While such a process may ease taxpayers’ pain by being wrapped up more quickly, it remains most unlikely, Braidley notes, “that they will look upon an enquiry as an enjoyable experience”.
Contractors who work through their own limited companies will doubtless concur with these sentiments. As Braidley put it, “It could be a long hot summer for small businesses with HMRC breathing down their necks”.