Contractors will be roped into tax cheat clampdown
Contractors are within the crosshairs of three new campaigns targeting “tax cheats”, particularly if their business sells on products which they receive commission on or if they were late registering for VAT, writes Martin McKechnie, a director at The Low Tax Group.
The current round of Her Majesty’s Revenue & Customs’ campaigns against tax avoidance goes back to the Offshore Disclosure Facility in 2007, when taxpayers with unpaid taxes linked to offshore accounts or assets were targeted.
HMRC’s approach since then has revolved around offering specific targeted campaigns rather than general tax amnesties. They have so far selected specific sectors including plumbers, taxpayers with offshore accounts, restaurants, members of the medical profession and late VAT registrants.
The new campaigns will focus on:
- Missing tax returns. This will initially target taxpayers who fail to complete returns and who are liable to pay tax at the highest rates.
- Home improvement trades. This campaign will target several 100,000 trades-people in construction and building work such as roofing, window fitting, bricklaying, carpentry and joinery.
- Direct selling. This campaign will target customers who ought to be paying tax on income they earn from buying and selling goods direct to others, or from the commission on these sales.
As CUK has reported, the Revenue is using 'web robot' software to search the internet and find information about specified people and companies. This software, according to HMRC, helps identify previously hidden relationships, uncovering anomalies between elements such as bank interest, property income and lifestyle indicators, before homing in on unexplained inconsistencies. Using the software HMRC can more accurately target taxpayers who have failed to pay the right amount of tax due. And bear in mind, HMRC says the web robot is just one of a number of new “cutting-edge” tools at its disposal.