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Do you pay tax? Do you pay enough tax? Be warned that the tax man seems to be engaged in a concerted campaign to rope in the tax evaders.
We have noticed a growing number of 'initiatives' by HMRC in recent months to encourage reluctant tax payers to come clean. Seems the Treasury feels it is time to make a serious move on the black economy.
Bob Wheatcroft, Tax Partner at accountants Armstrong Watson, comments on HM Revenue & Customs activities in this area. This makes for interesting reading.
Bob says, "HMRC has entered into a number of tax amnesty type arrangements in recent months. For example, on 1 March 2011 they announced The Plumbers Tax Safe Plan. Under this arrangement plumbers and their advisers were given until 31 May 2011 to own up to undeclared funds, and until 31 August 2011 to pay up any arrears of tax, penalties and interest. HMRC generously offered the same arrangement to any other taxpayers who wanted to step up to the plate. If you have taken advantage of this process your penalties will be limited to between 0% and 20%. If you have not, and get caught out, your penalties could be as high as 100% of any unpaid tax discovered.
“There was an Offshore Disclosure facility, now expired, and the longer term Liechtenstein Disclosure Facility. This encouraged, or encourages, holders of offshore bank accounts to come forward and declare income and gains deposited overseas that should have been declared on taxpayers' returns.
“Additionally HMRC is active in other areas where there is no amnesty element, no discounting of penalties etc. For instance, from July 2011 HMRC has announced they will be visiting some 50,000 businesses annually to check the effectiveness of their business records. If record keeping does not meet their reasonable care standards this will no doubt trigger more in depth enquiries into possible short fall in profits declared in previous years.
“The VAT arm of HMRC is actively on the lookout for traders who should be registered for VAT but are not.
“And finally HMRC has announced they will be targeting restaurants. There are a number of vulnerable areas that HMRC will be taking a close look at, in particular: the reliability of income records and the tax treatment of tips and service charges."
So there we have it. Small business owners take note. If you have any 'uncertainties' in your past tax returns, now may be a good time to consider owning up. Bob Wheatcroft has the following advice to offer:
"If you do have undeclared income or gains it will reduce your exposure to penalties if you make a full disclosure before HMRC come calling. Once you get the phone call, or discover the brown envelope on the mat, this option will be lost."
For further information please contact Judith Moor on 01228 690100 or email firstname.lastname@example.org
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