
Tax Enquiry Advice Partnership |
Investigations of small businesses, businesses which should be registered for VAT but are not, and employers’ compliance yield higher returns. When the HMRC Department detects people in the hidden economy, it can impose a penalty of up to 100% of the tax owed. In most cases it either imposes a much lower penalty or waives the penalty. In 2006–07 the Department imposed penalties of £5 million, amounting to around 3% of the tax identified. Prosecutions rose to 69 cases in 2006–07. The Department did not receive much publicity on these cases, limiting their wider deterrent effect. To encourage people to declare tax owed, the Department has run advertising campaigns, which have led to a further 8,300 registrations and should result in additional tax of £38 million over three years. In 2007, the Department introduced the Offshore Disclosure arrangements to encourage people holding overseas bank accounts to voluntarily disclose and pay any tax owed. This followed landmark rulings against five major financial institutions which required them to disclose to the Department details of around 400,000 bank accounts. Some 45,000 people came forward bringing in around £400 million at a cost of £6 million, a return of £67 for every £1 spent. 2009 Offshore Amnesty -10% again - this is the latest gossip but there are conditions and you could still have problems if you didn't take up the last one. So if you are in any of the red highlighted areas feel free to contact us before the dreaded letter drops through your door. With our experience we can help anyone at any time but inevitably it is much better if you come to us before too much damage has been done with the enquiry. We can keep HMRC within the bounds of their statutory authority where needed and therefore protecting your interests. We are also available for second opinions or assisting any tax advisers and/or accountants who feel they need that little bit of extra assistance. There is no fear of us stealing any client's as we mainly specialise in tax enquiry work or specific tax planning requests Looking forward to hearing from you for an initial chat (free for the fact finding discussion) and feel free to use the Feedback Form to outline your problem as you see it. |
| The Summary of a report by the Public Accounts committee Are you or one of your clients in one of the High Risk areas - see the red highlighted groups below and right - If so contact us for specialist Tax Investigation and Enquiry advice and expertise. The summary of the report said "There are no reliable estimates of the tax lost through the hidden economy but it could be over £2 billion a year and involve around 2 million people. HM Revenue & Customs (the Department) spent £41 million in 2006–07 on encouraging people and businesses into the formal economy, and detecting and imposing sanctions on those operating in the hidden economy. The Department achieved a return/cost ratio of 4.5:1 which should increase as recent initiatives achieve their full effect. Areas of risk include
It said the "Since 2003–04 the Department has detected some 30,000 hidden economy cases a year, a detection rate of only around 1.5%. The amount of tax from cases detected in the hidden economy has, however, increased by 13% in real terms since 2003–04. The return on the Department’s investigations in 2006–07 was 5:1. To increase detections, the Department has been making more use of data matching techniques. It also set up the Tax Evasion hotline in 2005 for members of the public to report suspicions of tax evasion. The hotline received over 120,000 calls in 2006–07 but progress in investigating cases has been slower than the Department expected. The Department completed 2,000 investigations compared with 5,500 planned, yielding additional tax assessments of £2.6 million compared with £32.5 million planned. |
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