Is HMRC benchmarking the tip of the iceberg for the UK SME?

Is HMRC benchmarking the tip of the iceberg for the UK SME?

Benchmarking for driving instructors is a guide devised by HMRC for businesses to compare business performance with other business in the same trade.

It is a scheme that it is beginning to test on certain trades - one of these trades is driving instructors.

HMRC using benchmarking to check tax returns

The HMRC is testing the use of benchmarking as it believes that it will help business owners to make sure their Tax Returns are correct.

HMRC has gathered information over three years from driving instructors, analysed turnover and expenses. From this, it has worked out a net profit ratio.

HMRC has determined that the net profit benchmark ratio in this sector is between 39 and 59 percent.

This means that if you are a driving instructor, HMRC would expect your net profit to be in the region of 39 and 59 percent of your turnover.

If your business net profit ratio is not within this range, HMRC may believe that this indicates that there are errors within your tax return.

We are here to help with any queries that you may have regarding the benchmarking system and of course, to make sure that your tax returns are dealt with efficiently and accurately – making sure that no undue distress is caused by unnecessary errors!

For more information, request a free of charge call back from our website or click here to enquire.