Hi,
Does HMRC check all self assessment tax returns submitted by self employed sole traders online?
Thanks.
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Hi,
Does HMRC check all self assessment tax returns submitted by self employed sole traders online?
Thanks.
Replies (21)
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They do go through some such process of automatic selection. Is something worrying you...?
Doubtless there's some half-hearted checking against employer records, I suppose.
Anything that takes no human effort will be done.
What are you expecting HMRC to cross check for a self employed person?
What data could they cross reference and discrepancies from what?
Most of my sole trader clients don’t know how much they’re making so I didn’t know this info is available to HMRC. There must be industry norms against which the tax return is measured and this could flag an inspection.
The original Inland Revenue computer system was originally created by the legendary William Heath Robinson, a genius who was so way ahead of his time he was in great danger of lapping himself several times over.
It was a finely-tuned piece of kit designed to identify concealed claims for lunch and sandwich expenses masked as subsistence claims.
The present mark XIII.2 version (beta stage) of the HMRC computer is a much more advanced piece of kit akin to HAL 9000 from "2001: A Space Odyssey". (Some would conclude the HMRC system is a trifle smarter).
This piece of kit is so advanced, it just knows when your accounts/tax return are not telling the truth. Just like when a wife knows that her husband has nipped into the pub on the way home for a sly pint, with the lame excuse that he has had a puncture, hence the delay. Your wife just knows you are fibbing.
The XIII.2 seems to have a "sixth sense" and can sniff out a rotten set of accounts/tax return a mile away.
So, the moral is, ensure that your accounts/tax return consist of an honest set of figures with no dodgy claims. BE AFRAID. BE VERY AFRAID. HMRC IS COMING TO GET YOU.
Posts like this are why we need the addition of emojis or responses stronger than "Thanks" on Accountingweb.
That said, you've just set off another coughing fit, so thanks for that, Penny.
But still not sure they have yet developed GPP
Readers of the late Douglas Adams will spot what I mean, but lets just say, for those uninitiated non HHGTG individuals (those of you with no souls), that all the automatic doors do not yet have a sunny disposition.
I'm so depressed.
But they do use the improbability drive to calculate tax codes.
Strictly they use the Infinite Improbability Drive to produce infinite coding notices and they do not have a Heart of Gold.
"And I'm getting old" (Neil Young/God reference)
The bloke who scored the goal in the 1969 FA Cup Final ?
The man who might have been being referenced by The Osmonds (he was not I hasten to add) and who Ronnie Van Zant hoped would remember.
I believe hmrc have some info in which they would expect to see certain amount of exp compared to turnover for certain trades and I think if data falls within these brackets it goes un checked.
Manual intervention happens when something looks way off. Could be a genuine reason but I think it's flagged at that point only.
In addition to the above, there's also a random review flagged, even if there's nothing else to give rise to a closer look.
Many "enquiries" may go unnoticed, since if the reviewing officer decides there's nothing untoward it is simply closed down at that point.
There must be some checking because, occasionally, HMRC will tell you about an employment that the client had forgotten to mention.
PAYE is checked automatically as HMRC have all of the information on hand to do that. They pick up other cases by something appearing off, or too different to the industry norm. They also randomly select returns across industries to be checked.
HMRC also share information with foreign tax authorities, so if a person for example sold a holiday let in Spain but didn't tell HMRC, HMRC would likely find out about it.
No idea if they still do it but other investigations/checks re other non direct tax matters may give rise to data coming to HMRC- many years ago there was a spree of checking black fish landings with fish wholesalers, this gave HMRC a tranche of names of parties selling to them and if your name was there but you say had not been declaring the sales you got an investigation- I also had, again years ago, clients in the Western Isles, HMRC had been doing some dot joining re island trading and a fair few entities up there got a pull.
HMRC do move (or at least did years ago) work in mysterious ways.
Something fishy about that.
The short answer is yes but it is wrong to think about a single system. There are numerous computer systems which are linked to provide information across not only taxes but also benefits, capital and investments. They have started to make extensive use of their Artificial Intelligence to identify cases for enquiry.
The main systems at the moment are:
For corporates, a Revenues and Payments system to provide analysis of returns (all sources) and identify disparities.
Ridiculously, they acquired a second-hand system from the Canadian revenue known as Income and Taxes Evaluation, a system that cuts across corporates, self-employed and employees.
Thirdly, for traders, a system of records, analysis, sampling and highlighting of business inaccuracies and non-compliance.
Big Brother is definitely watching you and failing to file or filing incorrect returns is no longer a viable option. You have been warned!