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Are HMRC investigating me?

You have seen the posters with the peeping eyes. You have heard the radio adverts with the approaching footsteps. Do you dismiss these campaigns as you are certain they will not affect you?

Well maybe you should think again?

Tax avoidance made the news on several occasions recently. The Jimmy Carr and Chris Moyles tax schemes. Big corporations — Starbucks, Amazon, and Google — under fire for ‘not paying the tax that they should’. The prosecution of Harry Redknapp and Milan Mandaric for tax evasion (this being the highest profile case for 20 years) and even though the HMRC failed to secure a conviction, this was a long drawn out stressful affair for all concerned.

The tax man says that all this behaviour is not legal and costs the country £12 billion in lost tax every year. It is clear that the government and public opinion is dead set against it too.

So how does this affect you?

HMRC is getting serious. Twice as many people were prosecuted in 2012/13 as in the year before. HMRC’s aim is to increase the number of prosecutions year on year, doubling the use of search warrants at homes and businesses and adding 2,500 extra specialist investigators to enable them to do so.

Those of us that specialise in this work are seeing the affect that this has on the ground.

Increasingly the tax man investigates very quietly. Accessing bank records including those abroad (which have previously been confidential), sharing data with many other organisations, looking in social media sites for information — all very Big Brother — and happening now.

Perhaps surprisingly to many people, HMRC also gets 70,000 reports each year of tax fiddling made by ex-spouses, envious neighbours, business competitors, etc.

So who is the tax man going for?

A common misconception is that the focus is on the super rich — it is not. Middle class, working people are most certainly on their radar. HMRC have recently concentrated on construction and restaurants (always favourites of theirs), doctors & dentists, and buy-to-let. They are now looking at private security, property rentals, and specifically in the Midlands have special teams targeting the used motor trade, and those with hidden wealth.

Top Tips — are you at risk of being investigated?

Do you:

  • Avoid paying-in/declaring cash income?
  • Work ‘off the books’?
  • Put personal expenses through a business?
  • Avoid mentioning foreign bank accounts?
  • Fail to mention interest on investments?
  • Pay for services in cash or misdescribing items on an invoice? (to help someone else evade tax)

The list goes on...

If you do not do these things you may well know someone who does.

As soon as there is any hint of interest by HMRC it is vital that people take expert advice immediately. Despite the potential seriousness of the situation there are many ways to reduce it and often to obtain immunity and avoid any criminal investigation or prosecution.

Similarly, if anyone has worries that their tax affairs are ‘not entirely appropriate’ even though the tax man is not yet on their tail, they should seek help to establish if they may have a problem (they may not have) and if so, their options to avoid it becoming serious.

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