Small firms fear the tax man may be poised to milk them of £600 million without properly explaining why.
The Federation of Small Businesses is concerned that HM Revenue and Customs plans to introduce a series of spot checks to ensure small firms’ records meet minimum reporting standards are just a cash raising exercise.
According to the Federation, HMRC has failed to explain how it will choose the businesses it checks or what criteria it will use to judge their record keeping.
Companies that fail the spot check could face fines of up to £3,000 and HMRC’s consultation document has said the scheme could raise up to £600 million over the next four years.
FSB regional chairman and Sheffield businessman Gordon Millward argues SMEs need help.
“Rather than imposing fines which could cripple some small firms, it would be more pertinent for HMRC to move to a system where small businesses are encouraged to improve record keeping and understand their tax obligations better,” he said.