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Tuesday, 10 July, 2001, 16:11 GMT 17:11 UK
Revenue targets small firms
Tax experts are warning people who submit three line accounts to be careful
Small businesses have been put on their guard
The Inland Revenue is to step up investigations into small businesses with annual turnovers of less than 15,000.

It will focus on those businesses where expenses fluctuate frequently from year-to-year and are out of kilter with the expected turnover.

People who are likely to be affected are those who run part-time businesses form home, the semi-retired or small-scale cottage industries.


The Government should take action now and tell the Inland Revenue to stop stifling small scale enterprise. I believe that many of these businesses are under deducting expenses. The Revenue should concentrate its resources on persistent tax evaders

Chas Roy-Chowdhury of ACCA
The move has angered accountancy bodies, who say that these businesses are simply a "soft target" for the Revenue's inspectors.

They also fear that small business owners will have inadequate resources to deal effectively and efficiently with tax investigations.

One accountant said that the Revenue had "lost touch with reality".

Return warning

People who run businesses with annual turnovers of 15,000 a year are only required to fill in three lines on the self-assessment form - called a three line account.

They need only indicate their profit, expenses and net profit, which then gives a taxable amount.

The Inland Revenue is advising anyone concerned to seek advice from its staff
The number of businesses with turnovers of 15,000 has doubled
But experts are now recommending people who submit these three line accounts and are close to the 15,000 turnover limit to submit more detailed figures.

They believe that this will create less problems in the future, as the Revenue is less likely to be suspicious.

Chas Roy-Chowdhury of the Association of Chartered Certified Accountants said: "The Government should take action now and tell the Inland Revenue to stop stifling small scale enterprise.

"I believe that many of these businesses are under-deducting expenses. The Revenue should concentrate its resources on tax evaders."

The Revenue said that it was not launching a "massive hit campaign" against small business owners, but confirmed that it was concerned.

It is writing to people who have declared turnovers of about 15,000 for two years running and is advising them to seek advice from the Revenue.

If they do not come clean or ask for help, the Revenue said that they "won't have an excuse" if a tax investigation found errors.

A spokesman said: "We have identified that there may be a problem if the turnover has been the same for a number of years, because the number of businesses with turnovers of 15,000 has almost doubled recently.

"Statistically there may be cases where compliance needs to be stepped up."

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