Tax – How do they find out?
A few months ago we published two articles by Tom Casagranda outlining some of the methods used by HMRC to identify people who are not declaring all of their income.
Tom is an ex HMRC employee who now offers a consultancy service. He wrote the articles to highlight the ways that people inevitably leave a trail when trying to avoid declaring income.
The first article deals with general methods used to select taxpayers for enquiry, whilst the second article deals more specifically with undeclared income from property lets. If you haven’t already done so, we recommend you read the articles.
November 2009 Tax newsletter
Our November 2009 Newsletter was published a couple of weeks ago and I forgot to post a link to it.
You can sign up to have the newsletter delivered to you by email. It’s free and we won’t bombard you with loads of unwanted rubbish.
October 2009 Newsletter
Our October 2009 Newsletter has been published covering topics such as the 20th anniversary of the VAT Option to Tax and transferring investment property into stock plus information about late filing penalties.
If you would like to receive the newsletter into your Inbox regularly, please sign up today.
September 2009 Tax Tips newsletter published
Our September 2009 Tax Tips newsletter has been published and is available to view.
It contains articles on the recently announced amnesty for taxpayers with overseas bank accounts, paying dividends, correcting VAT errors and giving shares to employees.
Why not sign up to receive our FREE newsletter straight to your Inbox as soon as it is published. We only publish about once per month so you won’t be inundated with spam – and we definitely don’t pass on any information to third parties.
HMRC Tax Enquiries
We’ve just published an article written by Tom Casagranda which highlights some of the methods used by HMRC to identify people who are avoiding tax.
If you are a tax evader, be warned. If you are an honest taxpaying citizen be thankful that you won’t be targeted.
If you do have a problem with HMRC Enquiries please contact us. Of course, if you want to ensure that your tax affairs are in good order, you can also contact us.
Free Newsletter
We recently launched our Free Newsletter, delivered by email to your inbox, covering tax news and information which we think will be of general interest.
It’s FREE. We won’t bombard you with loads of unwanted mail – just the Newsletter about once a month. You can unsubscribe at any time. You should find some interesting comments and information in the Newsletter. Is there a reason you can think of why you shouldn’t subscribe?
This is the link to the subscription page.
What’s the difference between Tax Avoidance and Tax Evasion?
The quick answer is “Prison”.
Tax Avoidance is perfectly legitimate. You can order your affairs and manage your business in the most tax efficient way to take advantage of rules, regulations, laws and concessions.
Tax Evasion is where you step over the line and deliberately misstate or hide transactions. This is illegal and, in extreme cases, can result in prison.
As accountants we do our utmost to keep our clients’ tax bills as low as possible, or obtain the highest possible refund. What we can’t and won’t do is become involved in anything illegal. Quite frankly, it just isn’t worth it. If it is found out that we have knowingly been complicit in tax evasion, the penalties we face can also include prison.
Maybe you hadn’t realised, because it hasn’t been widely publicised, that all accountants have to be registered and are legally required to disclose anything suspicious on a form called a Suspicious Activity Report (SAR). This has to be done without advising the client, otherwise the accountant is guilty of an offence called “Tipping Off”. Failing to make a report where it can be shown that an accountant knew about the offence is also a criminal offence.
The law has been around for a few years but really became fully operational in December 2007 and registration wasn’t completed until well into 2008. Already many thousands of reports have been submitted. Because of this legislation, confidentiality between accountants and their clients no longer exists in most situations.
Think back on any conversations you have had with your accountant over the past year. Did you say anything incriminating? Is there anything in your books or records which might trigger a suspicion?
The best advice is not to put your accountant in a position where they feel they have no option but to make a report, otherwise the Tax Inspector may come knocking armed with insider information.
Godkin & Co – sad to see them go
We’ve been advised that Godkin & Co, a firm of accountants with offices in Loughborough – close to us, are going into liquidation. Godkins have been well respected in the Loughborough area for many years and have a solid reputation. In all of our dealings with them we have found them to be professional and helpful. It is a shame that the recession seems to have had such an effect on them. It’s particularly sad that fourteen members of staff have also lost their jobs. Hopefully they will all find new employment soon.
The Liquidators are taking steps to sell the client base and clients should soon find that they have a new accountant but, with all members of staff being made redundant, there will be a break in continuity and long established relationships will be broken.
Most other accountants in the area, including ourselves, will certainly try to help if asked to do so by clients. We don’t like to see clients struggling through no fault of their own.
IR35 – a waste of time for HMRC?
It has been revealed that over a six year period the IR35 rules raised only about £1.5 million on average per year. When you consider that the original estimate, given in 1999, was that over £220 million would be collected in National Insurance alone – each year, it’s pretty obvious that someone got their sums badly wrong. Now, who was the chancellor in 1999?
Taking into account the cost of IR35 status enquiries and failed cases, it has probably cost more to collect the money than has actually been received. It is to be hoped that a future chancellor applies common sense and scraps the whole IR35 idea.
The information has been supplied to the Professional Contractors Group following a request under the Freedom of Information legislation.
IR35 is the mechanism introduced to stop the perceived drain on the exchequer caused by contractors operating through a limited company. It was thought that many “subbies” doing this were doing so to reduce their tax bill. Of course, the simple answer would have been to equalise the tax treatment of employed, self employed and companies. Strangely this hasn’t happened and it is still more tax efficient to operate via a Ltd company.
If you think IR35 might affect you, please contact us. If you want to look at the tax advantages of operating via a Ltd company, we’ll be pleased to help.
BPSS (Business Payment Support Scheme) getting tougher?
The Business Payment Support Scheme staff seem to be getting harder in their approach. I have rung them twice today on behalf of clients and the attitude and approach is definitely much tougher than it was just a few weeks ago. More questions are being asked and they won’t just agree to fairly lengthy periods of repayment without question.
I was surprised by the apparent ease which repayments were agreed when the scheme first started. I am, however, concerned that it could go the other way. There is a sensible balance to be struck and I hope that common sense prevails. Times are difficult for a lot of businesses and the BPSS has been a lifeline for a few of our clients, particularly with bank borrowing being so difficult.
I would be interested in the impression which other accountants are getting about the operation of the scheme and whether they think that it is becoming more difficult to reach an agreement.
