warns new survey of MDs and FDs
One in five UK businesses with a turnover of more than £1 million may be sitting on a mountain of unpaid taxes. According to a new survey from accounting systems and outsourcing provider Cevas Data Systems Ltd, 29,500 business have never audited their payroll and expense procedures or do so too infrequently to keep pace with the changing tax rules.
The survey*, conducted by Continental Research, showed that of 122,000 medium and large companies that had audited their procedures, 17,000 (14%) did so as a direct result of an Inland Revenue compliance visit.
Ashley Whittaker, CEO of Cevas said: "The tax situation surrounding expenses is extremely complex. With regular changes in the rules it can be an uphill struggle to maintain adequate systems, procedures and policies. However, the behaviour of employers undoubtedly helps to keep the Revenue compliance teams busy!
"With 4,000 businesses claiming to never have thought about conducting an audit of their procedures, and 8,000 not seeing the need for one, I strongly advise businesses to consider a rethink of their audit policies. This will not only assist in keeping pace with the law, but also with commercial developments within their business.
"The good news is that these audits need not cost a fortune, as half of them cost less than £1,000 and most costing less than £10,000. This may reflect the fact that just under half of businesses used in house resources to conduct the audit.
"However, firms should be cautious and always seek expert advice and assistance, because 22% of audits revealed liabilities of between £5,000 and £500,000 and with over a third of businesses failing to conduct regular annual reviews it is no wonder that the compliance activities of the tax authorities produce such rich pickings.
"It is not easy to maintain systems and procedures whilst complying with the income tax, national insurance, corporation tax and VAT rules and regulations that effect expenses. However, using outside assistance and specialist software solutions can assist businesses in paying the right amount of tax.
"Regular reviews of expense policies and timely enforcement of these within the expense claim process can actually reduce tax payments, with the survey showing half as many firms seeing tax reductions as tax increases following audits!"
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Issued by Kelso Consulting on behalf of Cevas Data Systems
For further please information contact:
Cevas Data Systems
020 7298 5757
James Sheppard or Rebecca Covington
020 7729 7595
Or visit http://www.cevas.com
Notes to Editors
* The survey was carried out from 15th to 19th October 2001 at Continental Research's central London 110-line telephone centre, by IQCS trained and monitored telephone interviewers, using full CATI (Computer Assisted Telephone Interviewing) facilities. 200 interviews were conducted with Managing Directors, Financial Directors and other senior managers of businesses with annual turnover of between £1 million and £100 million.
Weighting was applied by turnover, region and industry type to make the sample representative of the 135,000 companies with a turnover of £1 million to £100 million as estimated by the DTI.
· Cevas was the first company of its kind to use the web to provide a complete employee expenses outsourcing service, potentially ridding companies of the associated administration, whilst greatly enhancing management reporting facilities. Cevas predicts that this model will be widely employed by businesses of all sizes within two years.
Q1 When was the last time you reviews/audited your payroll expense procedures to ensure tax compliance?
~Since the Budget
~In the past year
~In the past 3 years
~Over 3 years ago
Q2 Was the audit a direct result of an Inland Revenue compliance check?
Q3 Why have you never reviewed/audited your procedures?
~Never seen the need
~Never even thought about it
~Don’t know/ No answer
Q4 Who did you use?
~Mixture of both in-house and tax consultants
~Software House/Software people
~Don’t know/No answer
Q5 How has the audit altered your tax payments? Have they…?
~Decreased by more than 25%
~Decreased by less than 25%
~Stayed the same
~Increased by less than 25%
~Increased by more than 25%
Q6 What levels of liabilities did the audit reveal?
~Not prepared to answer
Q7 How much did the audit cost?
Q8 When do you next plan to audit your procedures?
~Before the next budget
~In the next year
~Within the next 3 years
~Not for the foreseeable future
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