SOLIHULL restaurants are looking down the barrel of enforcement action by the tax authorities.
So says Lucas Markou, a partner in Solihull accountants Jerroms LLP, in the wake of the announcement that HMRC has set up a task force focused on Midland restaurants and aimed at raising £2.5m.
A similar initiative in other parts of the country led to restaurants being hit with over £13m of unpaid tax and penalties.
Mr Markou says that it is not just restaurants that are at risk: “There are more enquiries than ever and businesses are being penalised for not being able to demonstrate that they have sufficient records to back up their tax returns” he said.
Mr Markou points out though that the real damage to businesses from HMRC enquiries can go far beyond tax and penalties.
He said: “A tax enquiry can lead to a massive diversion of resources and in substantial professional advisers’ costs incurred in defending a business from the enquiry or negotiating a settlement.”
An enquiry may be in the form of what is termed a ‘full enquiry’, which investigates all aspects of the business, or an ‘aspect enquiry’, which focuses on specific areas in greater depth.
Businesses can be targeted for a specific reason, because of their sector or their involvement for example in cash sales.
Mr Markou, who advises businesses on tax investigations and enquiries, says businesses should minimise the likelihood and impact by maintaining high quality accounting records and tax returns.