New HMRC tax evasion task forces to tackle restaurants, fast food outlets and motor traders in South West
The tax office has appointed over 30 new task forces whose mission is to target tax dodging restaurants, fast food outlets and motor trade businesses in 13 regions – including the South West – which have already been identified by HMRC as areas of high risk tax evasion.
With over £900 million of funding behind them, the task force teams focus specifically on trades which have been identified as the main tax avoidance culprits. Businesses such as restaurants, the motor trade and fast food outlets tend to handle large amounts of cash, which is why they are high on the target list. However, it is likely that additional businesses will be focused on over the next few years.
“HMRC’s crackdown has already achieved a number of significant successes – the focus on London’s fast food outlets achieved a 100% hit rate and yielded £10m – and now the taxman is confidently expecting to collect more than £50m in unpaid taxes from trades in the South West, who have chosen to break the rules,” said chartered accountant Robert Stone, from Ilminster. “With this amount of money at stake, we know that HMRC really means business, but if you have paid all your taxes, you have nothing to worry about.”
The teams carry out intensive bursts of activity, during which they visit traders and investigate their records, as well as looking at their tax, VAT and PAYE. Although visits are usually arranged by letter or telephone, the task forces can turn up unannounced.
Included in the teams are specialists who cover the main taxes paid by a business. In addition, one of the team members could be an IT expert to assist with computerised business records and tills. Each team will target around 300 potential rule breakers.
HMRC is at pains to reassure law abiding businesses, but have made it clear that the tax office always aims to get its man. HMRC’s Director of Local Compliance, Richard Summersgill said: “Only those who choose to break the rules or deliberately evade the tax they should be paying will be targeted. We know we’re going after the right people. If you deliberately seek to evade tax, HMRC can and will track you down, and you’ll face not only a heavy fine, but possibly a criminal prosecution as well.”
Robert Stone said: “If businesses receive notice of an impending visit by a task force, then they must make it an absolute priority to consult their accountants and to take a number of practical steps, in order to be prepared for the visit.”
Robert recommends the following action:
Make sure that your accounting records show accurately what is happening in the business – getting the right system set up is vital. If you are paid in cash, do you have a decent till or some other way of showing that you are accounting for this properly?
Do you understand how VAT and PAYE affect your business? If you are not sure, ask your accountant. This is especially important when you start up, but is also essential if your business develops in a new direction, as it could affect your tax in ways you hadn’t anticipated.
If you are selected for a visit, talk to your accountant, who can contact the task force on your behalf. If, for example, you or your accountant can confirm that all your employees are paid properly through a PAYE scheme, then the PAYE specialist may be left out of the team visiting you. You might want to ask your accountant to be with you during the visit, or at least make sure that he is available by telephone at that time.
If you know that something is wrong with your tax for any reason, take advice from your accountant before the visit – it helps your case if you come clean early rather than denying that anything is wrong, or trying to cover it up.
If the task force does find something wrong with your tax, ask your accountant for help immediately. He can check the calculations and assumptions made by the team – they are not always right and can be successfully challenged.
What can happen if something is found to be wrong with your tax?
You will have to pay any tax that is owing.
You are likely to have to pay interest on any old tax and will also have to pay a penalty.
You could be criminally prosecuted – for example the maximum sentence for fraudulently evading income tax is up to seven years.
For further information or advice about HMRC’s tax task force, please contact Robert Stone, Robert Stone & Co on 01460 55661 or email [email protected] and ask for a copy of the Tax Task Force Advice Sheet or visit: http://www.robert-stone.co.uk/
Robert Stone & Co Chartered Accountants & Tax Advisers Ilminster.
You can follow Robert Stone on Twitter: @RobertStone7
For further information, please contact:
Robert Stone, BA, FCA, Robert Stone & Co, Old Magistrates Court, East Street, Ilminster, Somerset TA19 0AJ. Tel: 01460 55661.
Email: [email protected]