June 2025 — What Every Business Owner Needs to Know
If you’re running a small business, paying tax is part and parcel of what you expect. However you may be surprised that HMRC data shows that around 40% of corporation tax owed by small businesses isn’t getting paid, leaving a £14–15 billion hole in UK tax revenue every year.
That’s not a small issue – but what does this mean for your business, plus why using a professional accountant to calculate your corporation tax is now more important than ever.
What Is the “Tax Gap”?
Put simple the tax gap is the difference between tax that should be paid and tax that is acutallly paid.
For 2023–24, HMRC estimates:
- Total tax gap: 5.3% (£46.8 billion)
- Corporation tax gap: 15.8%, the highest in over a decade
- Small businesses alone account for ~60% of that gap—that’s nearly £14.7 billion
So, small companies are being seen a key part of the problem, and the scrutiny is increasing.
Why Is This Happening?
- Post-pandemic spike
- The small business tax gap increased from around 32% before the pandemic to 40% in 2021–22—and hasn’t shifted much since
2. HMRC struggling
- Budget cuts and reallocation during Brexit and COVID led to fewer experienced staff and poorer training.
- Customer support has slipped; there have been many reports of firms say HMRC phone lines are unreliable and the system too complex
3. Tax avoidance schemes
- Many “too good to be true” avoidance schemes are pushed to small businesses—HMRC estimates these cost around £5 billion alone
What This Means for Your Small Business
- Increased HMRC scrutiny
- Expect more audits, tougher reviews, and less tolerance for late or incomplete tax filings.
2. Rising penalties
- Late filing penalties have increased significantly. In April 2025, self-assessment and VAT late fines rose to 3–10%, with more digital compliance required by 2026 – and potentially the government could bring in further increases in penalties
3. Increasing compliance demands
- HMRC is pushing Making Tax Digital and will expect more detailed records, documentation, and accuracy.
4. Reputational risk
- Falling into non-compliance (even by mistake) can damage relationships with HMRC, banks, investors, or clients.
Why You Need a Reputable Accountant
- Accurate corporation tax calculations
- Accountants understand all allowances and reliefs—avoiding costly mistakes or overpayments.
2. Preventation is better than cure
- Professionals can prepare your filings correctly, dramatically lowering audit risk.
3. Stay HMRC-compliant
- They’ll keep you informed of changes to digital tax rules, filing deadlines, and best practices.
4. Save you time and stress
- No more late-night tax panic. You focus on running the business, your accountant handles the deadlines.
How Holy Brook can Help
- Corporation Tax caculation
- As part of our annjual accounts service we ensure that we check your taxable profit is calculated correctly, appropriate allowances applied, and HMRC‑approved procedures.
2. Digital filing & Making Tax Digital support
- We ensure your records and systems are up to speed and that our clients are using MTD compliant software.
3. HMRC liaison
- We act as your business’s agent with HMRC meaning we can call HMRC on your behalf raise or answer queries.
4. Proactive guidance
- Regular check-ins, reminders, and advice—no surprises at filing time.
Get Ahead: 5 Quick Tips
| Tip | Why it matters |
| Regular tax estimates | Avoid surprises and smooth out cashflow |
| Decline “too-good” schemes | Most avoidance plans are flagged by HMRC |
| Invest in proper bookkeeping | Clean books = fewer mistakes |
| Embrace digital filing | Increasingly required by law and simpler in the long term |
| Use professional advice | Peace of mind – and can save you money in the long term |
Enen if you’re compliant you need to pay attention
The current small business tax crisis isn’t just a headline—it’s a clear warning sign. With HMRC redoubling its efforts and penalties increasing, now is the time to get expert help. Partnering with a qualified accountant can help you:
- Stay compliant
- Ensure that if HMRC
- Protect your business’s reputation
- Focus on what you do best
Need help with corporation tax or bookkeeping?
If you are interested in having professional help with your corporation tax and accounts please do get in touch
