As part of ongoing efforts by the government to shore up their finances, targets have been set for the HMRC to recover supposedly billions in taxes that are unpaid for myriad reasons.
So, following the recent ‘amnesty’ for plumbers, the HMRC have announced further ‘attacks’ to attempt to recover undeclared and unpaid taxes from certain groups where they believe tax evasion is particularly high:
- Tradesmen not covered by the plumbers amnesty;
- VAT defaulters;
- Private tutors and coaches, including academic and fitness instructors;
- E-marketplace traders, such as those who buy and sell on eBay consistently in a way which appears to be a trade.
Although time-limited schedules are expected in the near future, HMRC did not confirm when these campaigns will start, nor did they give any specific promise of an amnesty for those who come forward; however, as normal, voluntary disclosures would get better terms than those who get ‘found out’ later by HMRC.
Also, HMRC are believed to have invested heavily in powerful web crawlers which may be able to identify mismatches between the lifestyle/expenditure of individuals/businesses, and what income has been declared for tax purposes. This technology just would have not been possible several years ago. Big Brother appears to be on his way…
HMRC is clearly keen to stress that it will hit very hard anyone who does not take advantage voluntary disclosures – failure to do so will run the very serious risk of prosecution if (when?) they are discovered. Anyone thinking about coming forwards would, however, be well advised to take professional advice beforehand – this could prevent any unnecessary errors which could make any bad situation worse.
There is a fear that those who make genuine mistakes with their tax declarations may be caught up in these drives – these people also need help from properly-qualified tax advisers.
There may be mild panic amongst eBay traders, but those who buy and sell private items on an occasional basis need not worry at all – the ‘web-bots’ will be looking for a consistency of ongoing transactions which could be classified as trade and therefore subject to tax.
Various previous and ongoing campaigns (e.g. offshore account holders, medical professionals etc) have already resulted in tens of thousands coming forwards and hundreds of millions of unpaid taxes collected. It appears that the campaigns work, and as long as they are, you can be assured that they will continue.
So, are you at risk? If so, you need to think about how you are going to handle it…