Small business owners concerned over new HMRC powers

One in five small businesses owners are concerned over new powers recently awarded to the HMRC, according to research by Premierline Direct.

As part of the new powers, which came into force on 1 April 2009, HMRC has the right to enter the homes of businesses and sole traders that claim expenses for 'use of home as an office' to inspect their business records.

17% of entrepreneurs surveyed said the threat of an investigation is more stressful than starting up their business and for 13% the worry is causing them sleepless nights.

According to the research businesses in the North East are the most concerned about being investigated with 45% fearful of a visit from HMRC, double the national average.

"HM Revenue & Customs is putting an increasing amount of resource into compliance in the SME sector. Dealing with a HMRC investigation can be disruptive, a distraction from running a business as well as costly," said Chris Little, managing director of Premierline Direct.