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HMRC has new ways to detect suspicious blips in tax returns
Professional tax advisers can
provide a degree of credibility
that an unrepresented
taxpayer may not have
The Revenue is hungry for a bigger slice of taxpayers’ funds. We
explore the consequences.
By Neil Harris and Geraint Jones, December 13, 2010
Though most of the media attention on the
Coalition's latest spending round was
focused on cuts in public spending, it did
not go unnoticed, at least to tax
practitioners, that the Chancellor was
increasing the amount of money available
to HM Revenue & Customs to fund
additional staff to combat "tax evasion".
Taxpayers and tax advisers may have a
different understanding of "tax evasion"
from that conveyed by government
ministers. However, HMRC undoubtedly intend to investigate more
taxpayers where they do not believe the "correct" amount of tax is being
paid. This is in addition to the task forces being set up to try and catch
individuals who are operating in the "black economy".
HMRC were granted sweeping new powers from April 6, 2009. Although
these powers were initially being used with a light touch, it is clear that if
they are to raise significant additional revenue, then HMRC will have to
become more aggressive. Indeed HMRC have already been told to
prosecute more cases of tax evasion. Nevertheless, we believe their main
focus will be to recover more funds as quickly as possible.
Over the last few years, HMRC have offered several amnesties to induce
individuals to declare untaxed income, especially where it was held
overseas. HMRC is also seeking agreements with tax authorities in other
jurisdictions to share information or to levy withholding taxes to be passed
to UK authorities.
Taxpayers can expect to incur
withholding taxes on overseas income
in some jurisdictions, which of course
can be offset against UK taxes only if
declared. They have even gone as far
as purchasing information from an ex-
employee of a Liechtenstein bank. Even
the most secretive of countries, such as Switzerland, are now starting to
enter into information exchange agreements with HMRC. It cannot be long
before anyone with income-
generating assets overseas is likely to find that HMRC knows about them.
Under current law, HMRC can investigate up to the past 20 years of a
persons tax affairs where they suspect fraud. This can result in significant
tax, interest and penalties, and it has not been unknown for a taxpayer to
pay over all of the undeclared funds to meet the obligation. This may get
even worse now that legislation has been passed, so that in certain cases
penalties of up to 200 per cent of the tax that should have been paid can be
levied - in effect doubling the potential penalty. For a 40 per cent taxpayer
that could result in 120 per cent of the income being paid over.
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EXTERNAL LINKS
Reeves.co.uk
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Tax investigation
(HMRC)
Survive and Negotiate
Successfully Tactics
and how to play the
game.www.appletonrichardso…
Tax investigation
(HMRC)
Survive and Negotiate
Successfully Tactics
and how to play the
game.www.appletonrichardso…
Tax investigation
(HMRC)
Survive and Negotiate
Successfully Tactics
and how to play the
game.www.appletonrichardso…
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HM Revenue and Customs: An eye on your pie
Page 1 of 2HM Revenue and Customs: An eye on your pie | The Jewish Chronicle
15/05/2011http://www.thejc.com/magazines/finance-2010/42485/hm-revenue-and-customs-an-ey...
Last updated: 12:04pm, December 13 2010
While these somewhat draconian moves will largely affect a small but
wealthy group of individuals, HMRC will also be targeting many more
business owners up and down the country and subjecting them to in-depth
inquiries into how their businesses operate.
Over the last 10 years, HMRC have been closing many of their local
offices, creating larger and larger district offices. The days of an inspector
knowing his patch have long gone. Inquiries are now selected by computer
analysis by comparing gross profit percentages, employment costs, and the
like. It is no coincidence that from April 1, 2012 company accounts will have
to be submitted to HMRC electronically in a prescribed format. This will
enable computer interrogation software to be used to ascertain whether or
not something looks "odd".
It is also not unknown for HMRC to embark on "fishing expeditions" in
which they send out letters asking various questions or seeking
confirmations that initially at least sound very innocent. The information
provided can then be analysed and cross referenced to other information
and then form the basis for a formal inquiry.
Taxpayers will almost invariably benefit from specialist help when dealing
with HMRC. Professional tax advisers are used to dealing with HMRC each
day and can provide a degree of credibility that an unrepresented taxpayer
may not have.
Experienced, reputable and regulated tax advisers regard their clients'
interests as paramount (though don't expect them to be complicit if you are
seeking to continue to avoid declaring income!). Such tax advisers know
how HMRC operate, how to handle negotiations and when sensible
compromises can be achieved. We recommend that you seriously consider
using a professional tax adviser to handle any correspondence from HMRC
in these circumstances.
Reeves is one of the major accountancy and financial services firms
practising in the South East of England. Established over 100 years ago in
London, it has built a growing reputation for its award-winning tax and
financial advice.
With offices in London, Gatwick and Kent, Reeves has more than 300 staff
including 43 partners.
The firm is known for its award-winning tax and financial advice, winning
the Large Firm category in the Accountancy Age Awards 2009 and twice
being voted the UK's best tax practice in the LexisNexis UK Tax Awards.
Neil Harris and Geraint Jones are partners in Reeves' London office. Neil
acts for owner-managed businesses and public companies, dealing with
financial reporting, audit and assurance and cross-border transactions.
Geraint is responsible for private clients dealing with tax-efficient
structuring, international and offshore tax planning and trusts; he also has
specialist experience managing the tax affairs of sports professionals and
entertainers
www.reeves.co.uk
020 7382 1820
Neil Harris and Geraint Jones are partners in Reeves' London office. Neil
acts for owner-managed businesses and public companies, dealing with
financial reporting, audit and assurance and cross-border transactions.
Geraint is responsible for private clients dealing with tax-efficient
structuring, international and offshore tax planning and trusts; he also has
specialist experience managing the tax affairs of sports professionals and
entertainers
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Page 2 of 2HM Revenue and Customs: An eye on your pie | The Jewish Chronicle
15/05/2011http://www.thejc.com/magazines/finance-2010/42485/hm-revenue-and-customs-an-ey...
