Whatever problems you are having with HMRC, we can remove the stress from the situation.
You may have never had an HMRC tax investigation, but given that the government continues to put HMRC under pressure to collect more tax revenues than ever before, even if you are amongst the most careful of Self-Employed MD/Owner you may come under HMRCs microscope at some point. HMRC problems, and the stress they cause will have a negative impact on you and your business.
We know that a detailed enquiry from the tax authorities, no matter what your situation is, can cause stress and anxiety. Furthermore any type of HMRC tax investigation can also take up a great deal of your time.
Some things you may not know about HMRC and tax investigations
HMRC have significantly increased the number of tax investigations they carry out.
HMRC’s “breakthrough” computer system, a new, powerful weapon against fraud, tax evasion and avoidance, will ensure that even the most determined are caught eventually. The system is called ‘Connect’, and was designed by defence contractor BAE Systems. Although it cost HMRC £45m back in 2010, it has already delivered £1.8bn of additional tax revenues.
Connect Computer Power
‘6 out of 10 tax enquiries use the Connect computer system.
Connect’ is a very appropriate name because HMRC has an unrivaled wealth of information about people living in Britain, due in part to its many connections with other databases, such as the Land Registry, Companies House and the Electoral Roll.
HMRC has more data than the British Library’.
The HMRC website is one of the world’s biggest websites at peak filing time. ‘Connect’ has access to such comprehensive data, allowing investigators to spot anomalies. It allows Tax Inspectors to build up literally dozens of connections for any one individual, creating a unique profile about that persons circumstances. It also makes it much easier for HMRC to check up on, and cross reference, an individuals’ tax returns.
Third Party Information
Did you know that HMRC also collects information from other organisations?
The tax authority’s access to Land Registry and DVLA data means it knows how much someone has spent on their house and can see vehicles registered to each address. So, if someone has bought a high value vehicle, but lives in a modest flat, that might not fit with that individual’s financial affairs. Maybe an individual owns some properties in their name, but has not declared any income, that would be a warning sign.
HMRC can easily build up a picture of a persons financial worth through the use of ‘Connect’.
Remember, what goes ‘on the web’ stays ‘on the web!
HMRC also grabs seemingly harmless information from social networking sites such as Facebook, Twitter and LinkedIn. If someone is constantly putting up pictures of expensive holidays and flashy cars on Facebook, but is paying minimal tax, then that could trigger an investigation. HMRC also obtains information from less obvious sources, such as adverts on noticeboards, in newsagents or even stories in local newspapers. So, all media is a valuable source of information for HMRC
Concerted Advertising Campaigns
HMRC’s advertising campaigns are designed to make tax evaders feel rotten about cheating the Exchequer when times are hard.. Ad campaigns emphasise that “the net is closing in”, and warn tax cheats to declare all of their income “before it is too late”
Apart from powerful computing systems, and the ability to gather huge amounts of electronic information, the tax authorities also use these tactics:
Mystery Shoppers – Tax inspectors also now operate undercover, in disguise, and in teams to root out suspicious behaviour.
Informers and Tip Offs – Embittered divorcees and disgruntled former employees are among HMRC’s sources of useful information.
Overseas Property Owner – Higher-rate taxpayers with properties abroad are among those targeted by the 200-strong HMRC affluence unit. This affluence unit has been set a target of raising an extra £560m over the next four years.
Offshore Bank Accounts – As well as overseas property, other investigations involve commodity traders and people holding offshore accounts. In-line with the above, International borders are increasingly meaningless for tax authorities pursuit of outstanding taxes.
Property Raids – HMRC have the power to raid the homes of people they suspect of not paying tax. Raids last year were 165% up on the previous year.
Fake Numbers – The “chi squared” test is another tool sometimes used by tax inspectors to check the reliability of reported figures, including restaurants’ sales figures. This test, also known as ‘Benford’s Law’, is a means of testing the randomness of figures. If numbers are made up, or appear to have some honest anomalies, there is a very good chance that HMRC will spot it and investigate.
What could be worse ?
If things have got so bad that you have been issued with an HMRC Distraint Order you clearly need help, and fast.
However all is not lost, so that’s where we come in.
HMRC Distraint Order – You have been handed an EF1 Notice of Distraint leaflet.
The EF1 Notice will state that HMRC will seize your possessions. They will then arrange for them to be sold at public auction. The HMRC Distraint Order gives you two stark choices:
You sign the Distraint Notice and if payment is not made within five days your possessions will be removed.
You decide not to sign and HMRC will take the goods immediately.
These options may seem draconian, causing you a great deal of stress. However, this does not mean there are no other options open to you. We can often resolve these seemingly impossible situations.
So we would urge you to get in touch today, either by e-mail firstname.lastname@example.org or better still by calling 01932 868 444. Arrange you ‘free, no obligation’ meeting. We are here to help you.