Tax evasion in the UK is at its lowest level for the first time in five years. This news will come as a surprise for some considering the constant reporting tax dodgers in the UK. Starbucks, Google and Amazon have all been slurred and MP´s are even questioning why Prince Charles is paying less tax than his aides despite making £19m worth of profits on property and investments.
Since the Treasury boosted the coffers of Her Majesty´s Revenue & Customs with £900 million of spending to strengthen its fraud team with an additional 2000 investigators and improve its IR35 strategies in 2011, tax evasion has fallen by 16% in the last two years. The tax man was also given additional powers to fine tax evaders with penalties up to 200% of the tax liability.
The new system allowed HMRC to recover an additional £12 billion of tax revenue in 2011 and they secured 400 criminal convictions in 2012. The tax agency estimates they will recover £22 billion by the end of the 2014/2015 tax year. In other words, HMRC is issuing a firm warning that tax offenders will be found out and harshly dealt with.
HMRC targets for 2013
The primary targets for the tax man in 2013 are online traders making profits via websites such as eBay and freelance communities, sole traders such as plumbers, electricians and doctors, together with private practices like dentists, solicitors and tutors. Public sector employees that get off-the-payroll benefits are also being targeted.
IR35 tax fraud investigations
The tax man´s strategy is to target specific business sectors by employing a sweeping system that catches the entire industry in its net. A business does not have to be suspected of attempting to evade tax to have an IR35 issued against them. Your company may simply be picked out by HMRC at random – even if you have submitted a Self Assessment Tax Return Form.
If your business is targeted by the tax agency will contact you in writing to make you aware that an investigation is being conducted. You do not have any other option but to comply and may find yourself issued with a fine if you filled your tax return form out incorrectly. The minimum penalty charge is £100.
What should I do if I am issued with an IR35?
HMRC have had instructions from the Treasury to improve on their success by 300 per cent and will pick up any discrepancy they can use to issue a fine. They are even known to request documents they are not legally entitled to see. If your business receives an IR35, it is advised that you seek professional assistance from a qualified chartered accountant.
If you have been informed by HMRC that your business is under investigation, call Taxaccolega, a low fixed fee accountant in London, on 08000 235 234 immediately and speak with one of our tax specialists before you contact with HMRC who may help and guide you. Our friendly advisors will liaise with HMRC on your behalf to ensure they do not try to catch you out with tax science.