HMRC’s deadline for self-assessment tax returns passed a few weeks ago, and many self-employed workers and small business owners have already received a penalty notice in the post for failing to complete their tax return or pay their balance.
In fact, 850,000 £100 fines have been sent out this year, with many people now being charged a further £10 a day penalty for failing to complete their return by February 15th. HMRC seems to be making an example of small businesses and sole traders, after revealing it was cracking down on late payments from small businesses earlier this year.
But what about the large companies? We’ve all heard about corporations such as Starbucks and Amazon, which have been caught paying minimal tax in the UK. It’s hard to understand why HMRC seems to be targeting the little man when single companies are holding back millions in unpaid tax.
I certainly don’t believe that every one of the 850,000 late-payers purposely avoided paying their taxes – many just don’t understand what is required of them. And that’s not only the case with self-assessment. The new RTI tax initiative is just a few weeks away and research shows that some employers are still unaware of what they need to do, with 65% unconfident about the changes.
I feel that the government should be working hard to help small businesses understand their tax duties, as there are many who are still in the dark about how much they need to pay. The full-time worker selling cupcakes at the weekends may not even know she is considered self-employed, let alone which forms she needs to fill in and when they need to be submitted.
HMRC’s advice week on Twitter is certainly a good start. Twitter users can ask tax questions using the hashtag #biztaxhelp and receive answers from the @HMRCgovuk account. However, to fully engage small businesses it would be helpful to simplify the tax process overall – combining this with practical training and workshops would help to spread more awareness about tax requirements for small businesses.