HMRC calls out tax-dodging taxi drivers
HMRC has used data provided by taxi-booking apps to identify drivers who may have under-declared their income from driving taxis or private-hire cars.
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Rebecca Cave is now retired from 35 years in the tax world, including eight years as AccountingWEB's consulting tax editor.
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Had one taxi licence renewer wander in looking for help. Licence had already expired. Person had not declared anything for 5 years.
The person he hires his taxi from had suggested that he claims that he just started trading. But odd then that he needs a renewal, not an application for a first licence.
That was a week ago. no further contact.
HMRC really should routinely ask taxi operators for details of their self employed drivers.
That would do more to close the tax gap than MTD ITSA would achieve in 20 years
HMRC did a purge on the taxi firm operators a few years ago and did through that get information on the self employed drivers operating through them.
Looks like the game will be up for most FTN cases and unless the drivers have a 2nd income stream from their self employment HMRC will have a pretty good idea of top line figure of turnover and the challenge will be getting the evidence of the business costs.
TIP FOR SCOTTISH READERS: They will be coming for you as from 6th April 2023 so you have the incentive to get your tax liabilities in good order before they come a calling. Unprompted voluntary disclosures get you lighter penalties as against those for prompted disclosures. Get on it BUT take tax Investigation Specialist advice before making any disclosure that goes back more than 2 years.
HMRC did a purge on the taxi firm operators a few years ago and did through that get information on the self employed drivers operating through them.
Looks like the game will be up for most FTN cases and unless the drivers have a 2nd income stream from their self employment HMRC will have a pretty good idea of top line figure of turnover and the challenge will be getting the evidence of the business costs.
TIP FOR SCOTTISH READERS: They will be coming for you as from 6th April 2023 so you have the incentive to get your tax liabilities in good order before they come a calling. Unprompted voluntary disclosures get you lighter penalties as against those for prompted disclosures. Get on it BUT take tax Investigation Specialist advice before making any disclosure that goes back more than 2 years.
This is not unusual and HMRC are using data from intermediaries in which to test that the income of a business appears correctly reported. I have seen this with dog breeders and HMRC checking their income against the amounts insured for those pets with pet insurers.
It is important that just because HMRC have information from a third party does not for direct tax constitute a discovery under S29 TMA 1970. It will be necessary for an inspector to demonstrate there is a flaw in the accounting records of the business. the position is not however, the same for VAT
Has happened for years.
In the 1990s HMG investigated black fish landings in the UK (with some prosecutions), this process involved them raking through fish wholesaler records, as they did so they noted down names and addresses of those selling the wholesalers fish. Lo and behold a few years later my then client (A grocer on the Western Isles) got pulled for an enquiry by HMRC Inverness- it transpired he had been spending his afternoons out in a boat with a friend and the pair had been selling the catch.
HMRC went after the low hanging fruit, those who had recorded no income from fishing, with them no books needed to be broken they just needed proof of the activity which they already had.
But HMRC didnt always get it right as I experienced defending an innocent customer in the processing fish trade at that time when serious tax evasion was alleged.
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Isn't this the sort of tax compliance policing (hey: a new acronym - 'TCP') that HMRC should be doing instead of inventing new ways to p*ss off its' 'customers'?
"Taxi" ......
Only 1.25%, that's pretty low given there would presumably be various instances in that total of HMRC being in error.
"HMRC is clearly closing in on taxi drivers who don’t declare all of their income. "
Yet again HMRC show a turn of speed to take decades to actually do anything and even then it will be another short run initiative soon forgotten about because it actually requires HMRC to do some real work..... and a drop in the ocean at that.
I recall a taxi ride back from a pub years ago and when he asked what I did the taxi driver started bragging saying that he'd paid no tax for 25 years and didn't intend to pay any ever. I suggested that if HMRC caught up with him he'd lose his house and he said he wasn't bothered as it was in his wife's name and he'd rather go bankrupt than pay HMRC. I didn't give him a tip seeing he was ripping the UK taxpayer off.
He was one driver in one little town.....imagine how many are like that UK wide.
And just like the BBL fraudsters they get away with it.
But now he won’t get his licence renewed unless he joins the club and puts his house in order
That's it, you go after the little people, don't bother about a tax system so monumentally complicated that compliance with it is nigh impossible, don't worry about taking 40 minutes or more to answer a 'phone call, don't worry about a policy of deskilling that is doubtless costing billions in lost revenue and taxpayers' time, don't worry about taking months to reply to correspondence,just you go for the little people. Make sure that you do it with the the same maniacal zealotry usually employed when you are hurtling off in the wrong direction.
People who type " 'phone" or " 'bus" are always extremelly challenging and annoying people.
HMRC is playing punch the mouse game. Here they go on for Taxi Drivers, when someone else is starting a new trick.
God save the HMRC.
This is far from new, HMRC obtained a warrant and gathered all the records of the main radio operator in Glasgow maybe 10 years ago, using the data obtained to find and investigate hundreds of under reporting taxi drivers. There are very clear and obvious ways HMRC should be pursuing tax dodgers and it's good to see them focusing their efforts somewhere useful for a change.
It is however worrying to see them make up their own rules and pretend they're actual laws again, something they're repeatedly guilty of.
Get rid of cash from society and the government will struggle to spend all the extra taxes they collect.
Careful ... that's my neighbourhood 'currency' you're flushing out into the open.
Like young grouse it's never had to experience such exposure and is now vulnerably exposed!
Talking of Grouse, HMRC tried to tax income the beaters were getting until the expenses of getting there CA's etc. wiped out any income.
My dad did a bit when I was young, he used to swap our excess eggs (we had 20 chickens) with the local butcher for meat. There was also apparently a cow dung for legal work transaction with a local farmer and I still have an oil painting he got which was used to settle one of his issued legal fees.
Same picture as this one (Laval seems to have painted the scene over and over) but my version is a wider painting circa 48 inches by 24 inches
https://www.invaluable.com/auction-lot/fernand-laval-1886-1966-paris-str...
Maybe as a matter of social policy earnings from running a single cab on a self-employed basis should be exempt from income tax. That is probably a tax cut we can afford!
That's a thought. I could give up my accountancy practice and earn more as a cabbie with far less 'compliance' and no tax. Where did you get that idea or was it tongue firmly in cheek?
Its this sort of nickel & diming by HMRC that annoys me.
Instead of doing cosy tax deals with major serial tax evaders they should be concentrating on the bringing these big fish to book.
"When you have lions roaming your camp, you do not hunt mice." Professor William Black.
I see nothing wrong about going after taxi drivers or extending it to look at all tradesmen because there must be a small fortune in income that goes undeclared for tax. I don't see it as attacking the small man, I see it as a way of tackling what is probably large scale tax evasion because it is perpetrated by so many.
The big boys also need tackled and more resources need to be spent to build water tight cases against these people.
Few things annoy me more than a taxi driver going on about the "rich" who don't pay their tax and then he tells me he can't give me a receipt or his card machine isn't working.
We all have to pay our tax and those who earn more pay more.
Without specifically commenting on tax evasion within the taxi / minicab industry, I think we all have to agree that cash is still king for numerous trades within the UK ; not to mention the evident rife moonlighting.
As far as I'm concerned full marks to HMRC for targetting their resources in this direction rather than hound OAP landlord Dick for useless quarterly MTD crap.
When I was in practice, I took a taxi-driver to what was then the Inland Revenue. The Inspector commented on the high cost of tyres. He complained he got through a lot of them. She then remarked on the extremely low mileage he got from them.
Oh dear!
'HMRC is clearly closing in on taxi drivers who don’t declare all of their income. Examples of drivers who manage to buy homes without a mortgage while declaring income barely over the personal allowance will be few and far between in future.'
The county is skint, the government lean on HMRC to bring more taxes and NI in, there is a lot more to follow. I bet there working on a way to analyse Bank receipts, with or without the taxpayers consent.