SMEs And Startups In UK Should Wise Up When It Comes To Tax Avoidance

Must Read

Amazon Locks Head With The Music Industry: Twitch Letting Streamers Use Unlicensed Music!

The global e-commerce giant Amazon.com, Inc. (NASDAQ:AMZN) has upset the biggies of the music industry as one...

Mobile Internet Speed In India: From Bad To Worse [REPORT]

Languishing. And la…g…g…i…n…g. The sorry state of the desi internet in India. In a...

Happy Birthday Ma Huateng: The Man Who Owns Facebook, WhatsApp Of China

The winning horse of the Chinese internet market and one among the Chinese billionaires, though not started...

At the end of last year, small businesses received a bit of a wake-up call from HMRC. Specifically, it was reported that HMRC collected an additional £474million in corporate tax as a result of investigations into SMEs during the 2016/17 tax year.

This represented a 5% YoY increase and was seen by many as a warning that the tax man was after smaller businesses due to the ease of targeting them as opposed to bigger corporations.

With that in mind, Solutions Loan has offered a helping hand to SMEs for enabling themselves to identify if anything they are doing could be interpreted as tax avoidance.

Advertisements

The first stage is to identify the difference between tax avoidance and tax evasion.

The Difference Between Avoidance And Evasion

Tax evasion is simply not paying your tax by not reporting your income or expenses. This is completely illegal. Tax evasion by small businesses actually makes up over half of the £2.5billion lost every year to tax evasion.

Avoidance is manipulating the rules using loopholes and complex technology structures to minimise liability for tax. If money is leaving a small business and going through a series of transactions or through other business intermediaries it’s likely tax avoidance.

What Are The Different Types Of Tax Avoidance?

There are three specific types of the tax avoidance scheme that small businesses could become involved with. They include:

  • Job Board Tax Avoidance Schemes
  • Land Tax and Stamp Duty Tax Avoidance Schemes
  • Gift Aid Tax Avoidance Schemes

Here they are illustrated in further detail:

Advertisements

jobs in UK

tax for startups in UK

how SMBs in UK aavoid taxes

What Businesses Should Do If They’re Unsure

If small businesses are unsure whether they are involved in a tax avoidance scheme, they should take a detailed look at their current finances and operations.

It’s clear from the above examples that tax avoidance schemes involve multiple steps with money being moved around.

These examples should help, but if businesses aren’t sure, HMRC is available to answer questions, as well as being available for businesses that believe they may unwittingly be involved in a scheme.

Levels of Fines SMEs Can Be Subjected To

HMRC require that anyone involved in a tax avoidance scheme must disclose it, with penalties for failing to do so.

Penalties start from £5,000 for businesses using the scheme, while those that devised it and fail to report it can be subject to fines of up to £1million.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Latest News

Farewell PUBG! PUBG Mobile and PUBG Mobile Lite Terminates Operations In India

Zàijiànle, lǎo péngyǒu! (good bye, old friend) Gamers, the time has come to pay...

Zuckerberg Criticises Apple For Not Letting Advertisers’ Track iPhone Users Completely!

When Apple Inc. (NASDAQ:AAPL) announced that iOS 14’s privacy-first updates would include an opt-in for iPhone users regarding apps collecting their unique...

Why Does It Make Sense For Apple To Build Their Very Own Search Engine?

Google’s sheer dominance over the search industry has remained unchallenged since its inception. But now, Apple is showing serious signs of rolling...

Samsung Overtakes Xiaomi in India: Hour of Glory or Portent of Things to Come?

The smartphone shipments in India has shattered all the previous record in Q3 2020. The crown at the top...

Happy Birthday Ma Huateng: The Man Who Owns Facebook, WhatsApp Of China

The winning horse of the Chinese internet market and one among the Chinese billionaires, though not started anything unique and innovative but executed...

Reliance Jio And Airtel Both Grab Top Spot In Customer Experience [Study]

What do winning brands have in common that the less successful ones don’t? It’s merely the fact that they adhere to the...

In-Depth: Dprime

Will ‘TikTok By Microsoft’ Be A Winner?

For the last two years, TikTok has been in the public eye for all sorts of reasons. First, it was the exploded...

Facebook Subscription Model: Looking Beyond Ad Dollars?

Seldom do job listings create a stir this gripping. However, when the job listing in question is a stealth post from Twitter,...

Will The Online Food Delivery Market in India End Up Becoming A Two-Horse Race?

It's pretty much evident that the food delivery space in India is all set to get riled up soon enough as one...

More Articles Like This