The Tax Health Plan (THP) was one of the first targeted tax disclosure opportunities, it was aimed at doctors and dentists with miscellaneous sources of income such as from writing medical insurance reports, working as a locum, or for signing certain certificates. Taxpayers who opted to use the THP were required to make a full disclosure and pay all tax, penalties and interest due by 30 June 2010.

HMRC are now confident they have processed all the disclosures from the THP. So they are now writing to over 2,500 doctors and dentists who did not take advantage of the THP, but who HMRC believe received some untaxed income. If your client receives one of these letters, they will have only 21 days to reply to HMRC.

If the taxpayer does not respond to HMRC within this time scale, the likely result will be a determination of tax due. A ‘determination’ is raised by HMRC where a tax return has not been submitted. Note, there is no right of appeal against a determination. It can only be superseded when the taxpayer makes a valid self-assessment, which means submitting a tax return. Where the taxpayer has submitted a tax return, HMRC can amend the taxpayer’s self-assessment if the enquiry window is still open, or otherwise issue a discovery assessment.

HMRC have used their powers to obtain lists of payments made to medical practitioners from pharmaceutical companies, insurance companies and locum agencies. These lists may not be entirely accurate as names and addresses can be confused. Sometimes the funds may be received and taxed in a personal company or partnership, when the payer believes they have made the payment to an individual.

Some serious cases will be referred directly to the Revenue and Customs Prosecutions Office for criminal investigation. If this happens to your client be sure to contact us without delay, on 0800 917 9176.

HM Treasury will continue in its fight against tax avoidance by the UK’s wealthiest people with the recruitment of an additional 2,250 tax inspectors.

Speaking at the Liberal Democrats annual conference in Birmingham, Danny Alexander, chief secretary to the Treasury, confirmed that the additional HMRC staff will move into new anti-evasion and avoidance jobs targeting around 350,000 taxpayers.

More than 1,000 of these new HMRC roles are being advertised this month.

Mr Alexander said: “These [350,000 wealthiest taxpayers] are the people who pay or should pay the 50p rate of tax. And my message to the small minority who don’t pay what they owe is simple, I agree with the Chancellor. ‘We will find you and your money’ and you will pay your fair share.”

Alexander also said that this package was already bearing fruit: “I promised you we’d collect an extra £7bn a year by the end of the Parliament; and I can tell you we’re already on track to raise £2bn this year.”

The Lib Dems have also vowed to put an income tax threshold of £12,500 “on the front page of its next manifesto” up from £10,000.

“Some people have argued that we should change our tax priorities and focus our limited resources on cutting taxes for the wealthiest instead,” said Alexander. “At a time of austerity, this argument simply beggars belief. If we are all in this together, those with the broadest shoulders must bear the greatest burden.

“Fair taxation of the wealthiest is key to our deficit reduction plan. Of course, if a better way can be found to raise the money from this group, I will be willing to consider it. But right now we must focus relentlessly on those who are struggling. And we need to make sure tax owed is tax paid.”

HMRC Tax Investigation into plumbers has begun in ernest

Five plumbers have been arrested and around 600 are under civil investigation by HM Revenue & Customs (HMRC) for failing to pay the right amount of tax.

The arrests and investigations have taken place during a campaign targeting plumbers which invited them to put their tax affairs in order. Some of those involved owe up to £150,000.

This is the start of co-ordinated action and more raids are expected to take place over the coming weeks across the UK, including Yorkshire, Kent, Cambridgeshire, Tyne & Wear, Midlands and South Wales.

John Pointing, Assistant Director, HMRC Criminal Investigation, said:

“These raids and arrests of ‘ghosts’ – people who have not declared income from the work they do – are the culmination of months of work by HMRC.

“We provided a chance for those we have arrested, and the 600 we are investigating, to come forward voluntarily and put things right. These arrests send a clear message that HMRC will take action against those who choose not to come forward and pay the tax they owe.”

Mike Wells, Director HMRC Risk & Intelligence Service, said:

“These arrests are just the start. HMRC is considering hundreds of further cases for criminal investigation in the plumbing and medical professions. Some people may have thought we were bluffing when we said we have information that we will use to prosecute tax evasion.”

Under the Plumbers Tax Safe Plan (PTSP), plumbers, gas fitters, heating engineers and members of associated trades who owe tax that they had not declared faced a penalty rate of only 10 per cent, with a maximum of 20 per cent if they disclose in full. They have until 31 August to arrange for payment.

If you are worried about these developments call us today on 0800 917 9176

New tax investigation campaigns targeting VAT defaulters, private tutors and e-marketplaces will be launched by HM Revenue & Customs (HMRC) over the next year.

HMRC will use cutting-edge tools such as “web robot” software to search the internet and find targeted information about specified people and companies. Using the software, HMRC can pinpoint more accurately people who have failed to pay the right tax. The “web robot”, used with the department’s Connect computer system, also helps find people who are trading without telling HMRC.

Connect alerts HMRC to previously invisible tax evasion by matching a vast amount of HMRC and third-party data, enabling a fast and focused response to tax evasion. It shines a light onto previously hidden relationships, uncovering anomalies between such elements as bank interest, property income and lifestyle indicators before homing in on unexplained inconsistencies.

HMRC announced last month that a campaign targeting VAT rule-breakers trading above the £73,000 turnover threshold but who have not registered for VAT will be launched in the summer.

Other campaigns that will be launched in 2011/12 will focus on:

* Those who provide private tuition and coaching. This addresses the risk posed by all professionals who, because of their field of expertise, are able to earn money from providing tuition and coaching – either as a main or a secondary income. It covers people providing private lessons, regardless of whether they have a teaching qualification, and could include, for example, fitness/dance/lifestyle coaches through to national curriculum subject tutors and others.

* E-marketplaces. This will cover those who are using e-marketplaces to buy and sell goods as a trade or business and who fail to pay the tax owed. People who only sell a few items and who are not traders are unlikely to be liable to tax and will not be targeted by this campaign.

* Trades. This will build on HMRC’s plumbers’ campaign and give an opportunity to another group of tradespeople to come forward and declare unpaid tax.

Mike Wells, HMRC’s Director of Risk and Intelligence, said:

“We want to make sure HMRC listens to as many informed views as possible for our future campaigns. We want the views and experience of people and organisations outside the department to play a fuller part in the campaigns that we design for customers.

“By being open about our areas of interest for the coming year we hope to maximise that exchange of information and ensure we reduce the tax gap and help customers pay what they owe.

“We will use the information we gather to pursue people who choose not to use the opportunities we provide for them to put their affairs in order on the best possible terms. It will be more expensive if we come and find people, so I urge them to come forward and disclose voluntarily.”

So far, more than £500m has been raised by HMRC from voluntary disclosures and a further £100m from follow-up activity. Previous campaigns have targeted offshore investments, medical professionals and people working in the plumbing industry.

HM Revenue & Customs (HMRC) has announced trials of a Single Compliance Process for tax enquiries across a range of taxes.

By simplifying and standardising the process for compliance checks HMRC believe they will “improve customer experience” and reduce costs as the check will only take as long as the risks and behaviours encountered dictate. Mmmm, call this employment tax expert a bit of a cynic but this single tax process has been tried before and this “new” idea is somewhat open ended

The trials of the new process will run for six months from 20 June 2011 (put back from 1 June 2011) in 10 different locations across the UK:

Reading/Slough,
Newcastle,
Warrington,
York,
Exeter,
London Euston and
Southampton in England;
Cardiff in Wales;
Belfast and
Edinburgh/Dundee.

The new process will be rolled out nationally from January 2012, subject to the results of the trials, so not pre empting anything there then!

David Gauke, Exchequer Secretary to the Treasury, said:

“This Government is committed to relieving the burden on businesses. We know that agents, individuals and businesses find some of HMRC’s current compliance practices drawn out and costly. A Single Compliance Process could help HMRC improve the customer experience and reduce costs.

HMRC is working directly with agents via the Compliance Reform Forum to help develop it, and will continue to work with them during the pilots.”

The Single Compliance Process will focus solely on the risks and behaviours identified in cases and throughout the life of the compliance check, irrespective of the head of duty (VAT, Income Tax, Corporation Tax and PAYE) involved. The process will be capable of addressing lower risk cases at an appropriate level, but will also increase in intensity should the approach be warranted.

HM Revenue & Customs has confirmed it is taking on an extra 100 officers to target tax abuses in the construction industry.

HMRC said it is doubling the number of specialist officers cracking down on labour providers who fail to pay tax.They are expected to bring in an additional half a billion pounds of tax across all business sectors over the next four years. Labour providers found guilty of tax evasion could face jail.

David Gauke, exchequer secretary to the Treasury, said: “This government has invested £900m in HMRC to crack down on people who break the rules. Expanding these teams will help make sure that we bring in the additional money that the UK needs. Labour providers who think they can exploit their staff and the tax system need to think again.”

Mike Eland, HMRC’s director general of enforcement and compliance, said: “Building on HMRC’s successful approach to tackling fraud in the labour provider industry, these teams will make it even harder for fraudsters.

“Labour providers are traditionally found in agriculture and construction where they supply workers to other businesses. But HMRC will also continue to focus its efforts on all sectors where there is a demand for a flexible workforce to meet seasonal and market demand such as leisure, food, transport, security and cleaning.

“We will tackle fraud by those employers who don’t play by the rules and the organised crime gangs who exploit their workers. We will also work collaboratively with labour users and businesses in these sectors to help them use legitimate providers. This will help to create a level playing field for compliant businesses to compete in the market place.”

This employment tax expert warns companies that there are many labour providers in the Construction Industry who are not legitimate and will cause you more problems than if you engaged the subcontractors on truly self employed terms

How many seemingly straight forward changes in forms from HMRC carry the potential for information collation leading to a tax investigation?

Well, later this year you will find that your solicitor, or property conveyance person, will be required to file new forms with the Stamp Duty Land Tax Office when you buy a property. After 4 July 2011 new forms need to be filed and you need to be aware that the devil is in the detail!

The new forms require that each lead purchaser provide the following unique identifier when completing the forms:
• Individuals – their National Insurance number, or
• Companies and Partnerships – their Unique Tax Reference (UTR) or VAT registration number.

So be warned HMRC will be setting up tracking processes that could find you walking straight into an HMRC tax investigation

Despite HMRC announcing that they would report on the outcome of the Business Records Check consultation on 31 March, we have seen the first letters being issued by HMRC, trying to arrange a meeting to carry out a Business Records Check (BRC).

The consultation stated that the BRC programme would start in Autumn of this year with 50,000 Checks per year being carried out. However, we have seen letters dated 21 March 2011 which clearly relate to the BRC programme.

We have been told by an HMRC contact that there are 4-5 offices issuing the letters, including Blackburn and Plymouth, and that taxpayers from specific geographical locations are being targeted. Areas mentioned initially include Sheffield, Oxford, Swindon, Stockport and Scotland. Based on the information we have received, we estimate that at least 1,500 letters could have been issued. This employment tax expert says do not be fooled by these visits they are real time employer compliance visits so if you receive notification contact us

HM Revenue & Customs (HMRC) has launched a campaign to target and crack down on suspected fraudulent tax credit claims from the self-employed.

Letters have started to land on the doorsteps of 12,000 self-employed people who are claiming tax credits. HMRC teams have been examining tax credit awards being paid to the self-employed and are writing to any whose claims may not be genuine or accurate. They are asked to contact the department and supply evidence to support their claims.

Failure to tell HMRC promptly of any changes in income can result in overpayment, which means that claimants have to pay back the money. They could also face a penalty and, in the case of deliberate fraud, criminal prosecution and imprisonment.

As part of a wider government crackdown, HMRC and the Department for Work and Pensions (DWP) have published a strategy designed to tackle error and fraud in benefits and credits.

Exchequer Secretary to the Treasury David Gauke said:

“HMRC is determined to take a tough approach to targeting possible fraud among tax credit claimants. Last year the Government launched radical proposals to reduce the billions lost to tax credit error and fraud every year. These losses are unaffordable and unacceptable.”
HMRC will now use credit reference agencies and data-matching to spot patterns of fraud. The department is also employing additional investigators and are examining each claim in high-fraud areas.

Disgraced former Labour MP Eric Illsley has been jailed for 12 months for fiddling his parliamentary expenses.

The 55-year-old became the first sitting Member of Parliament convicted of abusing expenses. He pleaded guilty last month to dishonestly claiming more than £14,000 of taxpayers’ money.

He faced massive pressure to stand down as the MP for Barnsley Central after his conviction but did not quit until this week, so entitling him to further taxpayers money

Passing sentence, Mr Justice Saunders noted that Illsley received on average £100 a week more than he was entitled to in expenses over a three-year period. The former MP admitted to probation officers that he did not need the extra money and attributed his actions to greed.

He made the fraudulent claims for council tax, telephone usage, service charges and maintenance, and insurance and repairs at his second home in Kennington, London.

Meanwhile former Labour MP Jim Devine has been found guilty on two counts of making false expenses claims at Southwark Crown Court. The 57-year-old submitted the false invoices for cleaning and printing work, totalling £8,385.

He was found guilty on two charges of false accounting and cleared of one other count relating to £360 for cleaning work.

During the trial Devine claimed his former office manager Marion Kinley paid herself more than £5,000 from his staffing allowance without his knowledge. Commenting afterwards, Ms Kinley said: “Justice has been done. The jury obviously saw through Mr Devine’s lies.”