HM Revenue & Customs (HMRC) is missing out on nearly £47 billion in unpaid tax.
A large chunk of this is down to small and medium-sized enterprises (SMEs), which paid just £22 billion of the £36.7 billion owed in Corporation Tax in 2023/24.
As the Government looks ahead to major spending commitments in 2025, it is placing increasing pressure on HMRC to recover what it is owed.
New hires to collect what is missing
To close the gap, HMRC has received £1.7 billion in funding to recruit more than 7,000 staff across compliance and debt management teams.
Their job is to check tax records and follow up on missed payments, as well as improve the accuracy of what is collected.
Why small businesses are under scrutiny
Many SMEs do pay their taxes in full, but those that do not often struggle for the same reasons.
Poor record-keeping, confusing processes, and limited admin support are all part of the problem.
Some are still using outdated systems or paper records, which makes errors more likely.
Making Tax Digital is not yet the full solution
While digital tax reporting is expected to reduce mistakes, the rollout of Making Tax Digital (MTD) for Corporation Tax is still some way off.
For now, the focus remains on getting the basics right, and that includes checking financial records regularly and submitting returns on time.
What business owners should do now
With HMRC stepping up its efforts, small businesses can expect more contact, more questions, and potentially more penalties.
Taking action now and updating records, investing in digital tools, or speaking with a tax adviser could prevent problems later on.
Speak to our team today for practical help with your tax responsibilities.
