HMRC has been forced to respond to a Freedom of Information Act request and confirmed the following:

• The new Business Record Check annual target is 20,000 visits, which represents a 30,000 reduction from the original objective of 50,000, as outlined in the Business Record Check Consultation Paper.

• The 20,000 annual target has been reduced on a pro rata basis for this tax year. 12,000 Business Record Check (“BRC”) visits are due to be conducted before March 2012.

• The 30 staff who carried out the original ‘Test and Learn’ BRC visits between April and July from Edinburgh, Irvine, Liverpool, Manchester, Portsmouth, Sheffield, Stockport and Sunderland tax offices are going to be assisted by a further 90 staff. More tax offices are going to be involved. The additional 90 staff are being drafted on to the BRC Team between September and November 2011.

In addition to this second round of BRC visits which have already begun, HMRC is also revisiting businesses deemed to have been keeping inadequate records during the first ‘Test and Learn’ exercise. The follow up letters state the intention is ‘to check that the appropriate improvements have been made.’

There is no official clarification from HMRC yet as to whether fines will be levied for poor record keeping during the second round of BRC visits, although HMRC has previously said that businesses visited during the ‘Test and Learn’ phase would not receive fines unless in the most significant circumstances

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

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.

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

Anyone hiding money offshore could face new penalties of up to 200 per cent, HM Revenue & Customs (HMRC) have warned.

From 6 April 2011 HMRC will increase their potency as far as tax investigations are concerned with increased penalties for offshore non-compliance – for income tax and capital gains tax – these will be linked to the tax transparency of the country involved. There will be increased penalties in place for under-declared income and gains from territories which do not automatically share tax information with the UK.

David Gauke, Exchequer Secretary to the Treasury, said:

“The game is up for those going offshore to evade tax. With the risk of a penalty worth up to 200 per cent of the tax evaded, they have a great incentive to get their tax affairs in order.

“We have given HMRC an extra £900m to tackle tax cheats because we are prepared to act against the minority who refuse to pay what they owe.”

Dave Hartnett, Permanent Secretary for Tax, at HMRC said:

“We are serious about tackling offshore evasion. Hiding tax liabilities offshore believing that you will never be discovered is no longer a realistic hope.

“These new penalties will increase the deterrent against offshore non-compliance. They build on other activity, including signing tax information exchange agreements, requiring information about offshore bank accounts and disclosure opportunities, including the Liechtenstein Disclosure Facility (LDF).”

The new penalties for income tax and capital gains tax non-compliance classify territories into three groups, which determine what level of penalty will apply for non-compliance.

This employment tax expert says, let’s have further tax investigations into expenses claimed by MPs and Peers following the conviction of Lord Taylor of Warwick of false accounting over his House of Lords expenses.

The peer had argued the six claims he had submitted – totalling £11,277.80 – were made in good faith. He acknowledged that he had contravened the expenses rules, but argued he had done so because it was a common practice amongst peers to claim items “in lieu of a salary” – please, you are a qualified barrister and quite frankly in any other walk of life this would be seen as quite simply stealing and at the bare minimum you would be out of a job, let alone facing the full wrath of the judicial system.

Stephen O’Doherty, reviewing lawyer for the Crown Prosecution Service special crime division, said: “No one could sincerely believe that a home in which they had no financial interest, had never lived in and had scarcely visited could count as their main residence.

“Or that it was permissible to claim for driving between Oxford and Parliament when they had not done so.

“Yet Lord Taylor claimed exactly that and landed the taxpayer with a bill of more than £11,000.

“A jury has seen through his dishonesty by finding him guilty of theft by false accounting. He will now face the consequences of his actions.”

In her closing speech to the jury, Helen Law, prosecuting, said the case was about “where Lord Taylor was living and where he wasn’t living”. Speaking of the trips he claimed for, she said: “Those were journeys that didn’t happen from a home that wasn’t his.

“Lord Taylor knew those facts and he said he didn’t attempt to mislead anyone. I’m going to suggest that as a lawyer and as a member of the House of Lords, the alarm bells would have been ringing loud and clear.”

Despite living in Ealing, west London, Lord Taylor nominated a property in Oxford as his main residence, which is where his half-nephew lives. In fact according to the reports the peer had never stayed overnight there and had only ever visited the property twice. He subsequently submitted six claims between March 2006 and October 2007 for overnight stays in Oxford and mileage to and from property. I will leave it to my readers to decide on the best course of action for this person!!!

It has been strongly rumoured that whistle-blowing website WikiLeaks will expose thousands of wealthy bank clients who have used offshore accounts to avoid tax.

Former Julius Baer Bank employee Rudolf Elmer has handed over two CDs containing the potentially dangerous information to WikiLeaks founder Julian Assange. Elmer who is to stand trial accused of coercion and violating banking secrecy laws – has said he wants to expose mass potential tax evasion.

It remains unclear exactly when and how much information will be released, although it’s been suggested that Assange will start publishing the leaked details in two weeks time after verification.

So If you’re someone that has an offshore bank account that is undeclared you need to come forward and declare it asap because there is no telling which tax authorities Elmer may have passed the details on to as well as WikiLeaks and there is every chance that HMRC will launch a tax investigation into reported cases

The Elmer list is not thought to be the one HMRC had previously bought, although WikiLeaks could hand over some of the information to the Serious Fraud Office.

The CDs are understood to include the details of 2,000 wealthy individuals and corporations from the UK, US, Germany, Austria, Asia and elsewhere.

This employment tax expert wrote some time ago about the disgrace that was the MPs expense saga. It was quite simple, an employee would be under a PAYE/NIC investigation, if found guilty, sacked and likely prosecuted, so why should MPs be any different. This is not a political statement, bring it on any MPs, any parties should be treated like anyone else. So finally today do we see some justice:

Former Labour MP David Chaytor has been jailed for 18 months after he pleaded guilty to making false Parliamentary expense claims. He pleaded guilty to three counts of false accounting relating to rent and claims for IT consultancy work that he had never been required to pay for.

He had asked for rent money covering homes in London and his constituency but it later transpired the properties were already owned by him and his mother.

Peter Wright QC, the prosecutor, said: “We say Mr Chaytor knew the rules, and we say why else would he produce false documents in support of his claims otherwise?”

This should make an interesting landmark for other cases due to be heard and let’s make sure that Parliament are also going to have to deal with business record checks – remember guys, accurate and adequate records!

HMRC are going to be on the attack in order to raise £600m starting this year (remember this number as you will need it later) so how are they going to do it – well, HMRC published a Consultation Paper on 17th December announcing that they intend to start a programme of Business Records Checks (BRCs) that will review both the adequacy and accuracy of business records within the SME sector.

This employment tax expert thinks that HMRC should invest in a good dictionary when it comes to the word consultation because once again they haven’t even waited for the period of consultation to expire (which it does on 28 February 2011) the programme of checks will happen starting in the second half of this year with HMRC projecting 50,000 reviews annually for the next 4 years. Their excuse is that the Consultation is merely concerned with how to implement the programme, not whether it is the right thing to do.

The BRC programme will also have a nasty sting in the tale as it is backed up by a tariff-based penalty regime for failure to keep proper records. The maximum penalty for failure to maintain business records currently stands at £3,000. HMRC have said that they do not intend to have a regime which simply levies £3,000 every time there is a failure to keep proper records – but watch this space because with a bit of cunning maths, HMRC have already stated in their impact assessment that this initiative will bring in £600million over the four years. Now that’s 4 years x 50,000 reviews x £3,000 penalties which comes to an amazing £600million

So now is the time to make sure that your records are correct because this is merely the tip of the iceberg, inadequate or inaccurate records will be only one part of the review and then you’ll be into a full employer compliance review/tax investigation. Contact us today to see how this employment tax expert can stop your company being a statistic