Her Majesty´s Revenue and Customs (HMRC) has been £900 million to improve its search for tax dodgers – otherwise known as IR35 investigations. In 2011, IR35 investigation helped HMRC recover an additional £12 billion of tax revenue promoting the coalition government to increase the tax departments funding in order to recruit an additional 2000 members of staff to target tax payers who provide false information on their tax return forms.
The primary targets for 2013 will be tutors, electricians, doctors, dentists, plumbers and public sector employees benefit from off-the-payroll arrangements. Online traders than make profit from selling goods and services via a websites or eBay are also under the microscope in a new HMRC scheme dubbed “The e-marketing campaign.”
Random tax fraud investigations
HMRC will conduct investigations at random by targeting specific business sectors. A business does not necessarily have to be suspected of evading paying their taxes to have an IR35 issued against them. If your company is selected HMRC will contact you in writing to inform you the investigation is taking place. Businesses have no option other than to comply.
Investigations of this nature have become something of a noose around the neck of the companies. Even if you have submitted your Self Assessment Tax Return forms in with the best intentions, new tax rules stipulate that if you have made an error you are liable to pay a penalty of at least £100. The intention of the government backed scheme is clear; raise tax revenues.
The Treasury has given the tax department a target is to improve last year´s return on investigations by 3000 per cent. Following the increased funding and additional powers to investigate companies for tax fraud, HMRC is confident the systems they have in place will work.
Seek professional help
If your business is subject to an IR35 Investigation you are advised to seek professional help people speaking with the tax man or sending them any documents as HMRC will pick up on the slightest discrepancy. In the past they have also been known to request documents they are not legally entitled to see.
In serious cases, the tax man even has the power to issue legal proceedings and since the IR35 Investigation scheme was introduced in 2011, 35 business owners face criminal proceedings for tax evasion. Although HMRC do show a soft side for online marketers by setting up a e-Market Disclosure Facility Helpline (0845 601 2944) to allow people to own up to none payment of taxes, voluntary acknowledgment will still incur a fine although in some cases it is damage limitation.
If you have any questions or concerns about IR35 Investigations call Taxaccolega on 08000 235 234 and speak with one of our tax specialists.