Builders most likely to bungle tax returns

 

Accountants have labelled the construction industry as those most likely to provide incorrect information on their tax returns, according to a new survey.

In a poll by Bloomsbury Professional, a third of those questioned regarded builders as high risk due to frequent use of cash payments and poor bookkeeping.

In November 2011, HMRC launched a new taskforce to tackle tax evasion in the construction industry in the North West and North Wales, claiming some in the industry were over-claiming expenses or suppressing sales.

Plumbers, buy-to-let investors, restaurateurs and electricians, all respectively listed in the poll results, are also some of the additional sectors the department has targeted.

AccountingWEB has provided a full list of HMRC's taskforces to date, which you can view here.

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Comments

Consumer pressure

The Black Knight | | Permalink

Until a few homeowners are dealt with for insisting on not paying the Vat then the situation will continue......added to which that amount of cash for an extension is probably a high value cash transaction for ML purposes.

we have even known stories of  HMRC officers demanding cash deals on building work.

builders reply "you are joking?"

" No everyone else does it "

"we can't do it for no vat"

"o.k then"

Did not get the job funnily enough.

The system does seem to encourage this sort of behaviour

1. Inspectors miles away in a central location, never drive past any building work on their way to work, and subsequently have no local knowledge.

2. Money laundering reports are ignored especially if less than £100K missing tax.

3. There is virtually no enforcement.

4. If you don't do it you are out of business, so what is the difference between that and the unlikely event you are caught.

5. If you are caught...you will perhaps still pay less tax...in many cases HMRC are nowhere near the real figure evaded.

6. We are English and grassing up anyone is not the done thing !

And that's before you look at The PPR abuse another huge area ignored. One builder round our way is on his 11th property !!!

 

johnjenkins's picture

Builders    1 thanks

johnjenkins | | Permalink

tend to be builders, not accountants. That's why they are top of the list of incorrect tax returns.

Although I don't agree with this I have to say it. When people at the top end of the pay scale are "getting away with it" is it little wonder that people at the bottom end will think "if it's good enough for them".

How can you deal with a homeowner who insists on a discount (regardless of whether it happens to be the VAT amount). It is up to the builder to decide whether to declare or not.

While the rich are getting richer and the poor poorer this will continue or we will need to build a lot more prisons. Then if all the fidlers are in prison who is going to do the work?

ccassociates's picture

Builders

ccassociates | | Permalink

Not all builders should be tarred with the same brush nor should others in the construction industry, Our clients tend to be some of each, I do however find that when I sit them down and explain how easy it would be for HMRC to find the missing cash simply because they have spent it they tend to comply a little more. One crucial point in all of this is the insistence of HMRC to treat occasional subcontractors as CIS or employees even though the subcontractor is registered as a tradesman and issues invoices. Example builder needs electrician for wiring a small extention or for some other electrical work, builder always uses tried and trusted local elecrician, maybe 15 or 20 times in a year. HMRC penalised builder for not operating CIS then insists that the electrician is an employee, if only temporarily. Result builder starts paying "cash" where does he get that cash from??  cash jobs.  The builder has become non compliant because HMRC,s unflexible and unrealistic approach is farcical, the result is HMRC lose more tax.

Adrian Pearson's picture

Poll details?

Adrian Pearson | | Permalink

Could the OP possibly post a link to the Bloomsbury Professional poll?

Without knowledge of the sample size and methodology used, it is impossible to interpret the stats above.

 

johnjenkins's picture

I Totally agree cc    1 thanks

johnjenkins | | Permalink

The only reason subbies are now being hit is because Gordon Brown decided to change the rules in order to get more NIC. Originally CIS was set up with Contractors and subbies with some Contractor/subbies - all registered self-employed. The system worked pretty well except HMRC got lazy and allowed too many subbies earning under £30k to have exemption certificates. Yes there was fiddling but probably not on the scale of the MP's and EMP's expenses.