There have been several initiatives announced by HM Revenue & Customs (HMRC) over the last few weeks. Here are just a few to look out for.
Specialist Tax ‘Task Forces’!
HMRC intends to target certain business sectors in specific locations: the first destination is the restaurant trade in London, soon to be followed by Scotland and the North West. The numbers involved are substantial: up to 600 businesses will be reviewed in each area. Here the emphasis is on uncovering tax evasion – basically the worst kind of tax offence.
A recent HMRC press release has indicated where those specialist teams might be moving once they’ve run out of restaurants: the construction sector around Olympic venues, “cracking down on Tax, National Insurance or National Minimum Wage breaches”.
It looks like they will be looking for the additional NIC due where sub-contractors are categorised as employees. But HMRC should know how difficult it can be to determine if sub-contractors are employed or self-employed. Will it be ‘evasion’ just because a contractor disagrees over employment status?
Targeting VAT Non-Compliance
HMRC intends looking at businesses which it believes are trading at levels above the VAT registration threshold but who aren’t VAT registered. On the one hand they say they are targeting ‘VAT cheats’ but on the other that they are focusing on businesses ‘who have not yet registered for VAT’... so are they really VAT ‘cheats’?
Given the pressure which HMRC must now be under to demonstrate ‘value for money’ there’s a real risk that businesses which might benefit from a little help and advice, will instead end up being treated far more harshly in a ‘dash for cash’.
Single Compliance Process
In theory this is a good idea, intended to save both HMRC and businesses time: HMRC officers will no longer just concentrate on one type of tax such as PAYE or VAT but will look at all areas together, so businesses won’t have to deal with separate enquiries/investigations from different officers dealing with different taxes. There are rumours that Inspectors will be telephoning businesses first, to arrange a meeting at the premises within a few days.
Certain ‘amnesties’ will probably feature regularly over the next few months/years and remain open to taxpayers generally. So they may be useful. But HMRC will take a dim view of taxpayers who don’t use these ‘amnesties’ for their business sector and are later found to be non-compliant.
As far as the new task forces are concerned, businesses may be treated more harshly just for being in the wrong business sector, in the wrong area. If there are issues to address, businesses might consider pre-emptive disclosure, enlisting professional guidance to manage the process.
If you are contacted by HMRC under these initiatives, only agree to meet at a time and a place that suits you, get professional help as soon as possible and, as a rule of thumb, don’t answer questions over the telephone – considered written replies will almost certainly be better.
By Lee Sharpe