THE TAXMAN GETS TOUGH!
Back in March HM Revenue announced the Plumbers Tax Safe Plan, and we reported this on the news page of our website at the beginning of April. Effectively the Revenue were offering an amnesty to Plumbers that may not have paid the correct amount of tax and the principle was quite simple, that anyone coming forward and making full disclosure by 31st August would be granted an amnesty from serious penalty charges, provided they made good any shortfall of tax and national insurance arising.
We suggested then that this was an ideal opportunity to come forward and make a disclosure to the Revenue about any undeclared income as the likelihood was that the amnesty would be extended beyond plumbers, if needed, otherwise the Revenue could face falling foul of the Human Rights Act.
Whilst many plumbers did come forward during the period, it is now clear that a large number did not. Perhaps their accountants had not advised them of the potential amnesty, or indeed, perhaps they had no accountant acting for them at all. Whatever the reasons are following the end of the scheme on 31st August, we understand that over 500 plumbers are now under active investigation by HM Revenue and Customs, and several have been arrested. The Revenue’s interest in this sector will continue over the coming months and the Midlands is one of the particular areas that has been highlighted. Those of us that declare our income and pay our taxes will probably have very little sympathy for anyone caught under this new initiative, but we should all sit up and take note that the tax man is taking a generally harder line in all matters, and this is likely to continue in the future.
Many small businesses over the last couple of years will have used the “time to pay” arrangements that were being offered by the Revenue to take the pressure of small and medium sized businesses. Huge numbers of small businesses contacted the dedicated helpline and agreed additional “time to pay” arrangements for VAT, PAYE, Corporation Tax and Income Tax. However, we are noting that this facility is now being withdrawn and businesses contacting the Revenue asking for “time to pay” are being told this is not possible because of the previous useage of the scheme by the same business. In other words the Revenue are beginning to take the stance that this “time to pay” regime was to allow small businesses to make changes so that they could pay future taxes on time. Any business that has used the facility over the twelve month period or more is now likely to be refused additional time to pay as they have had ample opportunity to put their house in order, and arrange alternative finance. Again evidence of the zero tolerance to either the non payment or late payment of tax.
The Revenue are now making increased use of the internet as a new source of information to track down non taxpayers. Most of us are now doing some element of shopping online, using online banking, and wherever we go on the internet there are sophisticated software applications that track our movements, our purchases, and savvy retailers are using this information to target potential customers. The Revenue have finally woken up to the fact that this technology can provide them with information about how much money people are spending, what their hobbies might be, where they have taken holidays, bank transactions and the myriad of information about an individuals income and expenditure. So, if you booked your holiday of a lifetime to Orlando via the internet, are living in a £300,000 home with a large mortgage, have just told all your Face book friends about your brand new BMW and declared £10,000 income on your Tax Return, don’t be surprised if the taxman comes knocking at your door sometime soon.
So where has that left us?
The simple fact that the Revenue are now using every tool available in order to track down those not paying tax, and in the fullness of time, it is inevitable that all will eventually be caught. The best advice I could give to anyone in that position is to come forward and tell the Revenue before they catch you as this will always leave you in a better bargaining position. For the rest of us, we clearly cannot rely on the taxman giving us additional time to pay any longer and the various penalty regimes for late payments of PAYE, VAT, Income Tax, Corporation Tax have become more onerous over the last few years. If you have regularly delivered your accounts at the last minute or paid tax a little bit later than you should things are likely to become far more difficult and more expensive in future. That said, those caught and forced to pay the taxes due will help close the financial deficit and make the playing field a level one for all of us. In a time when every business has to be competitive, those not paying tax and VAT will always have an edge over the law abiding majority, so the faster they are caught the better for everyone.
This Blog was written by Paul Bird
Emslie Bird Ltd
http://www.emsliebird.co.uk