June 19 2013 Latest news:
Adam Aiken, Editor
Monday, August 29, 2011
Tax experts are warning that the arrest of five plumbers should be seen as a warning that HM Revenue & Customs is serious about cracking down on people who moonlight or fail to declare their earnings.
Earlier this year, the taxman said it would be focusing on plumbers in its latest disclosure campaign. Previous campaigns had been targeted at doctors, dentists and restaurant owners.
Under the terms of these disclosure schemes, people who come forward and declare unpaid tax can pay a reduced fine – but those who fail to take advantage of the opportunity to pay their dues face being targeted by HMRC.
In the latest case, HMRC wrote to 50,000 people in the plumbing industry, warning them to pay any tax they owed or face big fines. Those who came forward before the May deadline were fined no more than 20pc of the money they owed.
But the taxman is now looking to catch those who did not cough up when they had the chance, and HMRC has mounted a series of raids against plumbers it suspects of owing tax. Five people have been arrested – in London, Hampshire, Surrey, Middlesex and the West Midlands – and further raids are expected in Kent, Cambridgeshire, Yorkshire, Tyne and Wear, the Midlands and Wales. It is thought that some investigations involve unpaid tax bills of up to £150,000.
Gary Ashford, of the Chartered Institute of Taxation, said: “People should not underestimate the amount of data that HMRC is holding. What we are now seeing is HMRC starting to use that information. The net is tightening on those who break the law.”
Graham Sillett, a tax partner at chartered accountants Lovewell Blake, said: “In the last couple of years, HMRC has adopted a system of offering limited tax amnesties to certain groups – doctors and dentists, plumbers, those with offshore bank accounts – as a way of collecting more tax.
“HMRC is now indicating it will prosecute those who have had an opportunity to disclose but have not come forward. It would normally build up a picture of an individual through information from informants, advertisements and other sources, and then instigate a tax inquiry before starting a prosecution.
“In extreme cases, it resorts to a raid on premises to obtain further information.
“Anyone who has not already made a disclosure should seek advice from a qualified tax specialist because even now – outside the amnesty period – the penalties will be less by making a voluntary disclosure.”