He said people who pay cash in hand to tradesmen are “diddling” the economy and diverting money from hospitals and schools and leading to deeper cuts in spending on public services.  And presumably from Civil Servants’ pensions: although the soon to retire Mr Hartnett who has a reputed £1.7 million pension pot didn’t mention that.

HMRC’s Permanent Secretary has been waging a verbal war against tax fraud for some time now.  He encouraged everyone to fulfil their “duty to ensure that other people do not evade paying their share of tax”.  Mr Hartnett urged anyone who suspects wrongdoing to telephone the taxman’s whistle-blower hotline, saying: “Every time someone pays cash in order not to pay VAT, the nation gets diddled”.   He promised to follow up the information received with tough tax investigations: saying “We are getting better and better at finding people who receive cash.”

The Telegraph also reported that the Revenue is planning a sixfold increase in criminal prosecutions to 1,200 next year.

How can Lynam Tax Investigation Experts help me?
Lynam Tax partners have a vast amount of practical experience in managing tax investigations and tax enquiries.    We can advise you on the best course of action and if appropriate, help you manage any necessary disclosures, in order to obtain the optimum outcome for you, your business and your family.
*For a free, private, no obligation consultation, call Paul or Gemma Lynam today on 0845 643 9997

In the case of CIR vs Cozens and Others, the taxpayers argued that they were not aware that a fraud had been taking place, and therefore no freezing order should be allowed. However, the judge in the Chancery Division issued the worldwide freezing order for the following reasons: HMRC had a good arguable case and there was a real risk that the taxpayer would otherwise put his assets beyond the reach of Her Majesty’s Revenue & Customs.

This type of extreme action by the taxman is usually only contemplated in Criminal Prosecution cases and in the most serious cases of Suspected Serious Fraud (Code of Practice 9) operated by the elite Specialist Investigations unit.

Criminal Prosecutions
Lynam Tax Investigation Experts have a vast amount of practical experience in managing serious tax fraud investigations.  If you are worried about a tax investigation we can advise you on the best course of action.  If appropriate, we can help you manage any necessary disclosures.  If you are facing criminal charges we can help you obtain first class legal representation, in order to obtain the optimum outcome for you, your business and your family.
*For a free, private, no obligation consultation, call Paul Lynam today on 0845 643 9997

HMRC has also warned there is a risk that employers could unknowingly hire workers who are in the UK illegally, or are earning below the National Minimum Wage.  This could result in enquires by HMRC and costs for the business, damaged reputation and even prosecution.

The taxman says that failure to carry out “appropriate checks” may be evidence that you knew or should have known of the fraud.  HMRC are not willing to tell you exactly what checks you should undertake.  The checks you will need to make, and the extent of them, will vary depending on the individual circumstances. You should ask the most appropriate questions required to protect yourself in the particular circumstances of your individual transactions.

Her Majesty’s Revenue & Customs have suggested that businesses should ask

• Does the labour provider need and have a Gangmaster Licensing Authority (GLA) licence?

• What is the history of the business?

• Is it a live company on the Companies House register?

• Have you visited the trading premises? Are they consistent with the business of finding and employing workers?

• Do they obtain workers from other labour providers?

• Are their proposed fees realistic, allowing the business to meet statutory minimum wage and tax obligations and still make a profit?

• Do they have Employers’ Liability Insurance?

• Are you making payments to a third party, for example a factoring agent? If so, why?

• Is the business VAT registered and set up for PAYE? Obtain a copy of the VAT certificate.

• Is the business paying its workers the National Minimum Wage?

• Do the workers being supplied have the right to work in the UK?

The taxman also suggests the following checks:

• Check directors’ identities by asking for passports;

• Ask for copies of Certificate of Incorporation, VAT registration certificate and GLA licence;

• Verify VAT registration details with HMRC before you use them;

• Ask for their bank details

What does it mean for me?

If you don’t carry out this due diligence, and keep records of it, you could end up losing a lot of money in unclaimable VAT, as well as facing other large tax liabilities (e.g. PAYE) and face swingeing penalties.

How can Lynam Tax experts help?
*If you are unsure as to how to carry out the appropriate due diligence measures, or are undergoing an enquiry and HMRC are alleging that you have failed to carry out appropriate checks, then you may need specialist help.  Lynam Tax specialists have extensive experience with regard to the labour supply industry and HMRC enquiries.
For a free initial consultation called Paul Lynam now on: 0845 643 9997

The taxman is transferring around 2,000 SME Compliance Checks into the new by the end of January 2012.  The teams will focus on direct tax avoidance schemes.  However Employee Benefit Trust cases will not be included.  Any business currently undergoing a Compliance Check in regard to such an avoidance scheme will be written to by the new office.

The purpose of the new teams is to create greater focus and sharing of knowledge within HMRC.  It is likely to be accompanied by a faster and more hard-hitting way of dealing with cases.  Generic letters are likely to be prepared.  If these follow the pattern of previous teams then voluminous documentation requests are likely to soon follow.  It is likely that HMRC will try and target test cases to fast track to the Tribunal.

What does this mean for me?

If you have purchased an off-the-shelf avoidance scheme then you are likely to be subject to more intense scrutiny.  It is likely that the promoters of the scheme have already considered all of the legal and technical issues. However, you may require assistance in dealing with the practicalities of an HMRC enquiry; particularly in dealing with the information requests.  If the case is likely to proceed to Tribunal then specialist advisers may well be required.

How can Lynam Tax Enquiry Specialists help me?
If you are undergoing a tax investigation or a compliance check then specialist help from Lynam Tax Enquiry Experts could save your blushes and your business.  Plus, our massive experience will almost certainly save you tax and penalties as well.
*For a free, confidential chat about your tax affairs, don’t delay, call Paul Lynam now on 0845 643 9997.

This is a simplified disclosure programme which will be followed up by full investigations of those who do not come forward.  Anyone wanting to take part has to register by 6 January 2012.  The Tax Catch Up Plan is aimed at anyone providing tuition or coaching, regardless of whether they have a registered qualification, or whether it is a main or secondary income; and on which the full tax has not been paid.  The scheme is available to people teaching traditional academic subjects, fitness and dance, musical instruments, art, life coaching, personal training and other instruction.

The taxman is warning that: “Once this disclosure window closes …those who have not come forward but are found to have unpaid tax liabilities will face investigation, maximum potential penalties of 100 per cent of the tax evaded, or possible criminal prosecution”.

This is not a tax amnesty.  The full amount of tax, interest and penalties still has to be paid.  But the process is quicker and simpler than normal.  It is mainly suitable for people with straightforward affairs and only one source of undisclosed income.  More complex disclosures may benefit from being dealt with outside of this scheme.

How can Lynam Tax Investigation Experts help me?
Lynam Tax partners have a vast amount of practical experience in managing tax investigations and tax enquiries.    We can advise you on the best course of action and if appropriate, help you manage any necessary disclosures, in order to obtain the optimum outcome for you, your business and your family.
*For a free, private, no obligation consultation, call Paul or Gemma Lynam today on 0845 643 9997

This will be very similar to the recent campaigns relating to both plumbers and to tutors and coaches.   The campaign is unlikely to be available to unqualified electricians or anyone who is not a member of an established trade body.  The taxman defines an electrician as being “anyone who installs; maintains; or tests: electrical systems; equipment; or appliances, under stringent safety regulations”.

This is not a tax amnesty.  It is a mechanism whereby people in the relevant trades, with tax irregularities, can come forward and make a disclosure using a simplified process.  Although the process is simplified most electricians will still require professional help in making a disclosure.  For people with one-off technical irregularities, in one or two years, the scheme can be very straightforward, and does offer reasonably low penalties.  Although the penalties are actually no lower than would normally be achieved in a regular disclosure.  However, for traders with significant omissions of profits, and in particular those trades where the irregularities go back more than four years, the campaigns can be problematic.

Although they have not announced any further details as yet, it is highly likely that HMRC have obtained a large amount of data regarding payments made to electricians from various sources.  It could be that they have obtained the membership list of the relevant trade bodies.  Also, they will be looking at payments made to electricians from public bodies, or in respect of special returns made by local authorities, large companies and housing associations. This would include any payments made through any grant, including grants relating to insulation and solar panels.

How can Lynam Tax Investigation Experts help me?
Lynam Tax partners have a vast amount of practical experience in managing tax investigations and tax enquiries.    We can advise you on the best course of action and if appropriate, help you manage any necessary disclosures, in order to obtain the optimum outcome for you, your business and your family.
*For a free, private, no obligation consultation, call Paul or Gemma Lynam today on 0845 643 9997

HMRC warn that they have been identifying those who did not come forward.  The main source of information for the taxman will be the tax returns that businesses are already sending in to HMRC, or accounts sent to Companies House.  Oddly, in the past, HMRC has made no attempt to compare the turnover declared for Income Tax or Corporation Tax purposes to the turnover declared for VAT. It is a very simple matter for HMRC to look at the turnover figures on the accounts sent in to them, and see if anyone trading above that level has or has not registered for VAT.  The situation for HMRC is then usually going to be black and white.  The evidence of the trading figures would have been supplied by the trader themselves.  If HMRC should choose to prosecute the evidence hurdle would be extremely low for HMRC, and the chances of successful prosecution therefore extremely high. The taxman warned that anyone who does not disclose shortly is risking: “Substantially higher penalties and even criminal prosecution”.

Under the terms of the VAT Initiative, those who have notified their intention to take part must register for VAT by 31 December 2011.  They will then receive their VAT registration number and instructions on how to complete their first VAT return.  Once this has been submitted most will face a lower penalty rate of 10 per cent on the VAT that has been paid late.

More crucially, and potentially more difficult, is the fact that HMRC also expect a disclosure to be made of any earlier year irregularities.  That does not only include the VAT that should have been paid, but also any other direct tax or other tax failings.  The taxman says: “I urge anyone with unpaid tax to use it to come forward and avoid potentially lengthy and costly investigations. The penalty they will pay will still be lower than when HMRC catches up with them. Those coming forward are also invited to disclose any other tax arrears. Where they have to pay a penalty on undeclared tax other than VAT, this will be lower than the usual penalty of up to 100 per cent of the tax owed charged on those who fall outside this opportunity”.

The VAT registration threshold is currently £73,000 turnover; on a rolling annual basis.  In previous years it was: 2006/07: £61,000; 2007/08: £64,000; 2008/09: £67,000; 2009/10: £68,000; 2010/11: £70,000.

Although it is now too late to register for the VAT initiative there are still substantial benefits to be had by coming forward and making a full early voluntary disclosure.  Prosecution can be averted.  Low penalties can still be achieved.  An intrusive and costly enquiry can be avoided.

How can Lynam Tax Investigation Experts help me?
Lynam Tax partners have a vast amount of practical experience in managing tax investigations and tax enquiries.    We can advise you on the best course of action and if appropriate, help you manage any necessary disclosures, in order to obtain the optimum outcome for you, your business and your family.
*For a free, private, no obligation consultation, call Paul or Gemma Lynam today on 0845 643 9997

The Mortgage Verification Scheme is an agreement between Her Majesty’s Revenue and Customs; the Council of Mortgage Lenders and the Building Societies Association.  Where mortgage lenders believe the evidence of declared income is inadequate, and therefore suspects a potential mortgage fraud, they will send the taxman details from the mortgage applications via a computer system.  HMRC will cross check the income details declared to the mortgage lender against information held on the HMRC computer system – including that picked up from tax returns and accounts.  It will then tell the lenders whether or not the details match up.

The taxman is also going to use the information received from the mortgage lenders in looking at its own risk assessment processes.  HMRC has set up a special unit to deal with the Mortgage Verification Scheme.  This means that HMRC has now got an additional source of third-party information to use when carrying out its risk assessments, or in the middle of the tax investigation.

How can Lynam Tax Investigation Experts help me?
Lynam Tax partners have a vast amount of practical experience in managing tax investigations and tax enquiries.    We can advise you on the best course of action and if appropriate, help you manage any necessary disclosures, in order to obtain the optimum outcome for you, your business and your family.
*For a free, private, no obligation consultation, call Paul or Gemma Lynam today on 0845 643 9997

The first taskforces, launched in May this year, targeted the restaurant sector in London, the North West of England and Scotland.  A taskforce aimed at London fast food outlets was launched in July.  The five taskforces announced today have been set up to tackle tax evasion in different areas of the country and in different trade sectors.  They will target:

• In Scotland: Scrap metal dealers.  The taxman will focus on suspected suppression of income or inflated expenditure;

• Also in Scotland: Fast food outlets deliberately falsifying their records and mis-declaring their true sales levels;

• In the North West and North Wales: Builders who are self employed or run their own company and who suppress sales or over-claim expenses;

• Also in the North West and North Wales: Landlords owning or renting three or more properties.

• In the South East: Taxpayers not submitting their statutory returns across Corporation Tax, Income tax Self Assessment, PAYE and VAT;

How can Lynam Tax Enquiry Experts help me?
If you are undergoing a tax investigation or a compliance check then specialist help from Lynam Tax Enquiry Experts could save your blushes and your business.  Plus, our massive experience will almost certainly save you tax and penalties as well.
*For a free, confidential chat about your tax affairs, don’t delay, call Paul Lynam now on 0845 643 9997.

The restaurant task force is the first of the special “smash and grab” trade-specific teams planned by the taxman.  The task-forces mode of operation is:  “intensive bursts of compliance activity in specific high-risk trade sectors and locations across the UK”.

HMRC are reported as claiming that for the first 45 cases where figures have been settled, the total tax “under consideration” was £634,000; an average of £14,000 per business.  The regions so far targeted are: Scotland 222 tax investigations, London 159 and the North West with 150 Compliance Checks.  Of these, it’s said that so far 22 businesses are now being considered for either Criminal Prosecution or the Code of Practice 9 Civil Investigation of Fraud process.

How can Lynam Tax Enquiry Specialists help me?
If you are undergoing a tax investigation or a compliance check then specialist help from Lynam Tax Enquiry Experts could save your blushes and your business.  Plus, our massive experience will almost certainly save you tax and penalties as well.
*For a free, confidential chat about your tax affairs, don’t delay, call Paul Lynam now on 0845 643 9997.