"A huge proportion of the tax gap is attributable to small businesses (60% or approx. £. Sole traders do not have to register with Companies House and it is likely that plenty fly under HMRC's radar. Even small businesses which are companies, although they need to be registered at Companies House, have significant exemptions in the level of detail that they are required to submit in terms of their accounts."
"Perhaps it is time for all small businesses, whether corporate or not, to be obliged to register at Companies House and file full accounts. The increased level of information available to the authorities might make it easier for HMRC to identify underpayments of tax with less resource needed to mount full blown investigations. While there would always be some who try to avoid registering as required,"
HMRC's last annual report estimates a £46.8 billion tax gap, similar to the reported £50 billion shortfall in public finances. A large share of the tax gap is linked to small businesses and sole traders, many of whom do not register with Companies House or file detailed accounts. Abbreviated accounts omit profit and loss information, which can obscure true business income and tax liabilities. Requiring all small businesses to register and submit full accounts would increase information available to authorities, potentially enabling HMRC to detect underpayments more efficiently and discourage non-notification of income.
Read at London Business News | Londonlovesbusiness.com
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