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
  • self-employed people, such as plumbers,
    electricians, builders and decorators, who often
    receive cash payments;

  • individuals who trade on the internet - they
    scour Ebay (Paypal etc),

  • buy-to-let landlords (with or without capital
    gains)

  • IR35 employee status

  • Corner shops and cash traders


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.
Are You At Risk of Getting Caught?
We can help either fully up front managing the enquiry or in the background helping
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Risks - who needs them?