Self-assessment tax investigations double in a year

Tuesday 20 May 2014

Now could be time to get yourself a contractor accountant if you want to avoid the net of HM Revenue and Customs (HMRC).

Figures seen by the Daily Telegraph show that the tax body has doubled the number of investigations it conducts into self-assessment taxpayers in just a year, indicating that it's now more important than ever to dot the Is and cross the Ts.

It has been revealed that last year the tax affairs of 237,215 people were investigated, compared to around 119,000 in 2011-12.

What's more, during the same period the number of self-employed people investigated quadrupled.

Unsurprisingly, there is now concern that those who unwittingly make a mistake on their form will find themselves on the wrong end of HRMC, according to the newspaper.

Tory MP on the Commons Treasury select committee told the Daily Telegraph: "[People in] middle England are easy targets. The year-end comes, they’ve filled in their forms and sometimes there are some errors there that HMRC may in previous years have left or not necessarily picked up, but they are now nit-picking.

"It doesn’t take away from the fact that this money is genuinely owed. But it’s the approach with which HMRC goes about it. When HMRC writes you a letter it causes a huge amount of stress."

The latest figures fly in the face of official data showing that Britons are becoming better at complying with tax rules. Indeed, by the January 31st submission deadline more than ten million were received on time. This was a record number and surpassed the 9.61 million recorded the year prior.

What's more, the number of forms filed online also increased, with 8.48 million submitted over the internet in January, compared to the 7.93 million noted in 2013.

Overall, the first submission deadline of the year saw 84.5 per cent of all self-assessment returns received by HMRC.

Yet mistakes still seem to be taking place, leading the increasingly vigilant tax body to act.

Tina Riches, partner at Smith & Williams, told the Daily Telegraph that a lot of problems involve capital gains tax.

"This is increasingly an issue for people as property values rise,” she said. "But there is a lot of misunderstanding. Lots of clients don’t know how the tax applies to second properties, for example, or what happens where properties are owned jointly."

In a move that could help to simplify things, the government intends to send around 24 million people personal tax statements detailing how much was paid in the previous year and how it contributed to public expenditure.

This extra layer of transparency - which will begin from October 2014 - could help taxpayers better understand the system.

What's more, the document can be passed on to contractor accountants, further improving visibility and record keeping.

Statements will be made available online for the eight million self-assessors that file through this medium.

Those that do not receive a tax statement are advised to use HMRC's tax calculator to work out their tax bill and see how their money will be used.

By Victoria McDonnell

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