Is your business taking tax seriously enough?

We would all like a bit of extra money to spend and HMRC is no different.

Every year since the 2005/6 tax year, HMRC has tracked the difference between the amount of tax owed and paid across the UK.

This is the tax gap, the amount of extra money that the Government would have to spend if everyone followed the rules.

The tax gap is growing and businesses are to blame. It is time for everyone to start taking tax obligations more seriously.

Are businesses making the tax gap worse?

It is becoming something of an annual tradition now for the official statistics behind the tax gap to be released and for HMRC to announce a need for small businesses to get a handle on tax obligations.

This year is no different, as small businesses are once again responsible for 62 per cent of the value of the tax gap.

This disproportionate contribution has remained fairly steady over the last five years and represents an ongoing challenge that must be overcome.

As the 2024/25 tax year saw the biggest haul of tax ever collected, it is little wonder that the tax gap reached its highest cash value of £59.2 billion.

The tax gap itself represents 6.4 per cent of the total tax bill, an increase from the six per cent of the previous year.

This is still better than the 7.5 per cent recorded in the 2005/6 tax year, but the trajectory is not going in the right direction.

Mid-size businesses have been able to improve things over time as the 13 per cent contribution at the start of the decade has been whittled down to eight per cent.

Put together, small and mid-sized businesses make up 70 per cent of the tax gap – approximately £41.44 billion in unpaid tax.

Why are small businesses struggling to stay tax compliant?

While there have been a variety of large businesses failing to pay their fair share, small businesses are undoubtedly keeping too much tax money out of the public purse.

The difference between small and large businesses is likely one of engagement with tax planning that is driven by a lack of knowledge and resources.

Small businesses may shy away from tax bills, letting them accumulate penalties until the problem has to be dealt with.

Large businesses understand the value of proactive tax planning, so they determine a tax-efficient way of operating that makes the tax bills more manageable.

Remember, the tax gap is the difference between tax owed and paid – being tax-efficient will reduce both categories and close the gap.

While small businesses do have a lot to focus on besides tax management, our expert team can give the professional support required to keep up with obligations.

We can review your position to make you aware of your tax exposure.

Through this, you can know exactly how and when tax bills will come your way so they can be incorporated into budgets.

Tax bills cannot be ignored or discarded, but being tax-efficient and confidently compliant allows you to take them in stride.

HMRC wants to take away £10 billion from the tax gap by the 2029/30 tax year and to do this, it may be necessary to impose harsher measures.

Getting on top of your tax now is vital for short- and long-term compliance.

If any new changes get announced, we will be by your side to make them more manageable.