The dash by HM Revenue and Customs to reclaim cash from tax avoidance, evasion and fraud has moved up a gear or two.
For anyone keeping their ear to the ground on the latest developments coming out of HMRC (and particularly their stance on the issue of tax avoidance), you may be aware that they have recently been the recipients of a near £1 billion war-chest in an effort to target and clamp down on those who are avoiding taxes and committing evasion and fraud. So how are they doing this?
HMRC launch four campaigns a year in their bid to recover taxes and their labours are expected to raise around £22 million per year due to the increased compliance. The campaigns are similar in structure but adopt various tactics which specifically target various trade sectors, with the business or individuals falling within the target sector being invited to make a voluntary disclosure of under declared income by a certain date, in exchange for lower financial penalties. However, once the voluntary disclosure window has closed, the campaign continues and HMRC begins enquiries into those who have not come forward. Last year, one such campaign was concentrated at online traders, from which HMRC raised more than £650,000 from 395 voluntary disclosures. 56 investigations have started since the disclosure window closed and £670,000 has already been recovered.
HMRC have several ways of obtaining information used to decide whether to open targeted Tax Enquiries such as:
Disgruntled ex-employees and of course bitter relatives; if a caller has enough evidence it will be investigated.
Credit Reference Checks
Suspicious of mortgage fraud, lenders from time to time pass on information to HMRC if a higher level of income is shown on application compared to tax returns.
HMRC cross check sales and lettings of known landlords and in particular have looked to have a much stronger enforcement of Capital Gains Tax.
HMRC boast an award winning computer system which compiles taxpayer files and information from third parties and the internet to flag up tell-tale signs of tax avoidance. HMRC are also investing a further £30 million into the system to makes its ability to uncover those evading taxes even more precise.
How can you protect yourself?
We are in the process of renewing our Tax Enquiry Fee Protection Service, the new year starts on 1st June. Taking up this service will give you the peace of mind that if you or your business are selected for investigation any additional fees incurred in having a robust defence put forward by us would be fully covered. Unfortunately, it is a sad fact that professional fees for dealing with Tax Enquiries can run into thousands of pounds and this adds to the burden of any additional liabilities, interest and penalties imposed as a result of the investigation.
If you haven’t already taken up our service but would be interested please call me on 0161 236 9077 or send me an email at firstname.lastname@example.org and I’ll happy to explain more. Please note that you can not cover an enquiry that has already been commenced.