Tax crackdown means HMRC gathers more revenue

Thursday 20 November 2014

A more hard-line approach to investigating tax payments and a higher focus on ordinary taxpayers means that HM Revenue and Customs (HMRC) has collected a record amount of tax over the last year.

The amount of tax that was collected through investigations into self-assessed individual taxpayers totalled at £845 million in 2013/14. This is an increase of 39 per cent from 2012/13 when the amount stood at £609 million. These figures were uncovered by the Daily Telegraph through a freedom of information request.

Since 2007 the amount of tax revenue gathered through personal tax investigations has risen year-on-year. However, it has nearly doubled ever since 2012.

Every year, HMRC chooses a number of cases that it believes need to be investigated. Taxpayers then need to provide evidence to support anything they have included in their self-assessment tax form.

Among those that may be affected by this are limited company contractors, sole traders and umbrella company contractors.

For this reason, it is well worth hiring a specialist accountant to ensure that contractors are always tax compliant.

What's more, keeping tax affairs in order and dealing with HMRC investigations can be a costly, stressful and and time consuming process. Therefore, having a specialist able to deal with these issue can be very helpful.

At Brookson, specialists promise to calculate tax liabilities correctly first time. They are proactive and thorough in their approach so that taxes should be watertight.

However, in the event that HMRC does challenge the tax status of one of Brookson's clients, its tax promise states that it will support them every step of the way.

Senior compliance manager at Brookson Matt Fryer said: "Each document related to a client's employment status is kept from day one so that we can provide any paperwork and evidence quickly and we can deal with HMRC directly. Our clients can be confident that they are tax compliant as we calculate all their VAT, PAYE, National Insurance and company tax figures."

Many more investigations are being carried out. In May, the Telegraph found that there had been 237,215 enquiries launched about people's tax affairs last year. This is up from 2011-12 when 119,000 were launched. HMRC refused to reveal the number of investigations that had been made during 2013-14.

The amount of tax collected from investigations focused on electricians, doctors and plumbers alone reached £100 million.

As well as a rise in investigations, a lot more people are being arrested for tax evasion. During 2010/11, 165 people were jailed for tax evasion but last year this figure rose to 1,165.

To launch an investigation, the taxman must demonstrate evidence to justify wider inquires. To do this, HMRC collates as much information as it can from banks and local councils. This is then put into HMRC's computer system, called Connect, which was built three years ago at a cost of £45 million and is rumoured to have more data stored than there is in the British library.

By Victoria McDonnell

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