Thursday, June 2, 2011

HMRC study shows majority of SMEs are tax compliant

My blog title is of course the converse of the FT report that: Business tax study says 35% would be dodgers. Apparently:
"More than one in three small businesses would understate their profits if they thought they could get away with it, according to official research." (The report was mentioned in Treasury select committee evidence (Q436-Q438) but does not seem to be available online)
The article goes on to quote the concerns of many in the business world re the consequences of HMRC believing that a third of small businesses are "attitudinally non-compliant" (ie: keen to cheat on their taxes).

I have a different perspective. To the extent that any genuine conclusions can be drawn from this research (which I doubt) - surely it's good news. Previously everyone assumed that HMRC started from the presumption that all or most small business owners were keen to fiddle their taxes. Now it seems that the converse is true. HMRC's research shows that two-thirds are honest, upstanding, Revenue fearing, tax compliant citizens. HMRC seem to agree. They are quoted in the FT article as stating that:
“Our research shows that 93 per cent of SMEs do not evade tax. We want to support the majority of honest businesses by reducing their administrative burdens and creating a more level playing field.”
If that's right this should all mean a change in Revenue attitudes FOR THE BETTER.

What do YOU think?

1 comment:

  1. It's a mixed bag.

    I find professional types - consultants, IT contractors and the like - are usually 'straight' and accept the tax cost of their business.

    The 'entrepreneurs' are the ones who want to avoid tax, even if it means bending the rules. These are the clients who go from accountant to accountant until they find one they can bend to their will.

    A good marker for HMRC might be to see how many profesional advisers a taxpayer has had. Could be a good indicator of tax evasion.