Have you bought a dog recently? Man’s best friend doesn’t come cheap these days (although the benefits invariably outweigh the costs) and, sadly, some unscrupulous people have discovered that there is a lot of money to be made from puppy farming. And when I say a lot, I mean a lot. And where there is a lot of income, that usually means someone should be paying a lot of tax…
Back in 2015, HMRC) launched an investigation after animal welfare groups expressed concerns about mass-rearing of puppies which were there sold illicitly in the UK. The BBC reported on two dog breeders in west Scotland who were handed tax bills of £425,000 and £337,000, while a former Crufts judge who was breeding puppies in the Midlands owed £185,000 in unpaid taxes. Elsewhere in England, a breeder received a £114,000 bill and a puppy breeder in Swansea a demand for £110,000 of tax.
This doesn’t seem to have deterred the puppy farming trade, with a report this year that one breeder has been landed with a tax bill for £1.8 million. To be liable for that kind of sum requires a lot of income, so that’s a lot of puppies.
While this is all reprehensible, the biggest problem in the last-named case is that the breeder seemed to be well aware of their liability but simply ignored it. This came to light last week when, at the end of the tax year, HMRC released a list of 145 payment defaulters that they deem to be deliberately not paying them. And, not shying away from being upfront about our any industry’s bad apples, we were appalled to see that at No. 3 on the list was L & S Accounting Firm Umbrella Ltd, an outsourced payroll services firm.
The full list can be viewed here (it includes Raffles Cockapoos – the firm that was landed with the aforementioned £1.8 million bill). There is £20.8 million owed by deliberate defaulters. What’s alarming in many cases is the length of time these firms have been defaulting on their tax. In the case of L &S Accounting Firm Umbrella Ltd, this stretched back to February 2017.
We know that firms can get into difficulties. That’s the nature of business. But the correct approach is not to bury your head in the sand and hope the problem will go away. If you are in any way concerned about cash flow or any other financial issue that might stop you pay the tax you are due, let us know. You really do not want to be on this list.
Callum McKinnon, M&S Accountancy and Taxation Ltd.
