To help hit these targets, HMRC is investing considerable sums in scrutinising the tax affairs of both businesses and individuals, with £300m specifically set aside to target SMEs and ‘high net worth’ individuals.
If you come under scrutiny from HMRC, it’s your responsibility to meet the cost of your defence – and this can run into thousands of pounds as enquiries can last for months, if not years.
As part of HMRC’s Strategic Plan they are creating an Enterprise Data Hub to pull into one place all the information they collect from other government agencies, banks and building societies, and numerous other external institutions. The aim of this is to allow tax officers to see everything about an individual all in one place.
In addition to the proportion of enquiries that are selected at random each year, HMRC relies on a variety of other tools and information sources to determine when to begin an enquiry. These include:
The Mortgage Verification Scheme: this enables mortgage lenders to check an applicant’s financial details with HMRC. If the income details declared on the mortgage application differ to the information held by HMRC, an enquiry is a strong possibility.
Credit and debit card transactions: card payment processes have to provide HMRC with reports of sales made. HMRC checks this information against the turnover declared by retail businesses, from which it can gauge how much cash is being declared by the business.
Additionally, HMRC claims that over 80,000 reports are made each year to its tax evasion team by jilted partners, wives and husbands, as well as disgruntled former employees and jealous business competitors…
Clayton & Brewill is a firm of chartered accountants in Nottingham, Long Eaton and Melton Mowbray. We offer proactive and cost-effective accountancy advice to business owners, individuals, farmers, charities and GPs.