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Builders targeted in latest tax crackdown

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10th Feb 2012
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Tradespeople such as roofers and bricklayers and people who make money from home catalogues are next in line for HMRC’s rolling programme of tax crackdowns which have raised more than £500m so far.

Earlier this week HMRC announced three new campaigns against tax evaders working in construction and building (including roofing, window fitting, bricklaying, carpentry and joinery); people who make money from direct selling; and people, often higher-rate taxpayers, who fail to complete tax returns

HMRC reaffirmed plans for campaigns targeting electricians and people who trade on e-marketplaces such as Ebay.

Previous tax clampdowns have focused on workers ranging from tutors and coaches, to plumbers and medics. People with money hidden in offshore bank accounts have also been targeted.

The tax campaigns aim to encourage people to own up about tax owed in return for favourable settlement terms.

The ‘voluntary disclosure’ programmes have so far recovered more than £500m in tax and £105m from follow-ups, HMRC said. A round up of the campaigns is on HMRC’s web site.

HMRC is using new technology to analyse information in tax returns and cross-reference this with information on the Internet to help it track down tax cheats.

Gary Ashford, who represents the Chartered Institute of Taxation on HMRC’s Compliance Reform Forum, and is also national head of tax investigations and dispute resolution at RSM Tenon, said: “These campaigns may have a feel of déjà vu to many of us – but to those in the Revenue’s sights they are new and serious. They are a real statement of intent from the government, and show they are determined to reach their target of bringing in an extra £7bn over the parliament through initiatives to tackle tax avoidance, evasion and fraud.”

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Replies (14)

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By johnjenkins
13th Feb 2012 11:11

Here we go again

TAX AVOIDANCE is LEGAL. Get your head round it HMRC and stop linking it with TAX EVASION and FRAUD. You're giving yourself a bad name. Loads more fishing trips, but what happens when ther are no fish left?

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By spurs1952
13th Feb 2012 11:18

Err

Why announce it ???

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Replying to neiltonks:
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By frustratedwithhmrc
13th Feb 2012 11:38

HMRC should be going after the EVADERS with hobnail boots

spurs1952 wrote:

Why announce it ???

Ultimately, these announcements are PR exercises. They generally succeed by putting the fear of being caught into those targetted, leading to a certain amount of unprompted disclosure, which I would argue is a good thing as it is a relatively low cost way of bringing in EVADED tax.

On the whole I am supportive of HMRC in this regard, in fact if anything I would prefer that they focused upon the clear and transparent EVASION that goes on in the cash sector (usual suspects) rather than harass small and micro businesses over minor issues with respect to the deductability of certain expenses.

As tax rates rise to fill the gap left by the deficit, actual EVASION will increase and this needs to be stomped on by HMRC hard and fast.

My main complaint is that through the redundancies and centralisations of the last few years, HMRC no longer has the necessary 'boots on the ground' in terms of experienced investigators in local offices to hunt down these EVADERS and drag them kicking and screaming into the light of day.

Time we had some successful prosecutions of local tax EVADERS hitting the front page of the Walford Gazette and other local newspapers.

 

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By johnjenkins
13th Feb 2012 11:29

Why pay out

£8m for a court case that they could never win?  Won't be long before we start seeing brown shirts and jack boots on the streets.

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By Stephen A Taylor
13th Feb 2012 11:31

Great Timing

Just what the construction industry needs when it is on its knees! Talk about kicking someone when they are down. How many of the people likely to be affected will currently be out of work? Yes, it probably was an industry rife with tax problems of one sort or another but the timing of this is hardly going to give the industry a boost. 

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By Roy Price
13th Feb 2012 11:51

Building Industry

I feel that the current CIS scheme change is  a huge mistake.  The previous system was simple, it was uniform throughout the industry, it was accepted by the sub contractors and the contractors and easily recognised.  The CIS vouchers were traceable and easliy hamdled in the rough environment of the industry e.g. written out by hand on site when a payment was made.  The subbies then just had to collect them and send in with their tax return.

What do we have now: every contractor potentially has their own system for recording CIS deductions and often sub-contractors do not receive adequate certificates.  It is more complicated for the sub contractor and contractor as computers get involved, sub contractors have to be verified with the Inland Revenue, it is not  system that can be used on site when payment is made.  The contractors find they have to engage expensive professional support or additional office cost.  There are draconian fines for failure to send in returns on time.

I would say it would be little wonder there is an increase in the cash in hand business and subsequent failure to pay the appropriate tax.

I also think it is a great shame that the Government does not stop to recognise that this is an industry that can only work by having a wide range of self employed trades; the normal concept of employment does not apply; but this is exactly what the IR are going to try and do in this crack down.

Sorry about the rant.

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Replying to johngroganjga:
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By Eddystone
13th Feb 2012 12:32

Subcontractors

Yes, quite - take a system that works and change it !  The Revenue cannot seem to leave subbies alone and would rather have them on PAYE and, taken literally per their 'employed or self-employed' guidelines, even a plasterer doing half a day's work should be on PAYE !

But yes, by announcing that they're targeting spefic sectors they may get a handful to take fright and 'fess up.

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By johnjenkins
13th Feb 2012 12:11

So what are e going to be left with.

All the poorer people out of work  and doing "cash in hand" jobs cos they get more on benefits.

The "middle class" losing their business cos they haven't "complied".

The rich sitting on their money.

Total stagnation.

No I don't blame HMRC but if they don't stop this relentless obsession with "everbodies on the fiddle" then they will have to take some stick.

 

 

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By louisVW4
13th Feb 2012 13:08

Cash in hand...

I do not understand why there is such a furore on this discussion, just because people paid cash in hand are finally being targeted. Yes, the industry is in a mess, but when the times were good, just a few years ago, it was boom time for the building trades and cash earners ...and the accountants that helped them avoid tax. I know a number who have far more holidays each year than me! Why should those on PAYE always carry the can for those that take cash and avoid tax and VAT ...and let's not open the can of worms that is 'Travellers'! How do they manage to afford nice new vehicles and buy land with no apparent source of income? Now, that would be an interesting HMRC target!!

The reality is, as with other highly publicised government initiatives e.g. the CSA, if you claim you don't have an income, move from job to job being paid cash, and have no visible assets when the tax man finally calls, then it's all a waste of time and money. The only place to track the payment is at the Contractor level. There is no reason why a Contractor cannot enter all payments together with subbie NI number into a simple web-based system.

The technology now being employed in the HMRC and DWP is increasingly sophisticated, allowing automatic linking between relationships, accounts, employers, addresses... you name it. It's relatively cheap to run, and will throw up potential suspects. The HMRC can then choose if they are worth pursuing with the scarce resources they have.

 

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By johnjenkins
13th Feb 2012 17:14

Why the furoreoreoreore?

(sorry I've been watching Steve Martin).

Louis, tax avoidance is legal and should not be frowned upon. Tax evasion, however, is illegal and gets our business a bad name. As you say "travellers" get away with it all. So do some big business. Now you wonder why there is so much commotion when the little people are picked on. Easy Targets.

 

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Time for change
By Time for change
14th Feb 2012 11:30

Whilst I can see the relevance

of these "campaigns" one of my plumbing client's has just received a second stereotypical letter, the contents and tone of which, he suggests are verging on harassment.

I tend to agree with him. He's been self-employed for almost 30 years, complies with relevant tax legislation and, has and is suffering like the rest of us, a recession which has been officially recognised for the last 3 years. When he's off work, which has been quite a regular situation, in that period, he can expect no financial assistance.

I've replied to the campaign team manager suggesting that there is a fine line, between public information and duty and, harassment and minority discrimination. My biggest surprise (tongue in cheek) here, is that it appears that none of the representative bodies seem to be taking one jot of interest in their members in connection with this intrusion.

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By johnjenkins
14th Feb 2012 10:46

and you wonder

why the Greeks are havin a pop. (yes I know different situation but the EU has a lot to answer for).

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By Robert Lovell
14th Feb 2012 11:08

John Cassidy on HMRC amnesty campaigns

PKF partner John Cassidy told AccountingWEB that the recent HRMC electricians’ amnesty was a rehash of old notes from previous campaigns and "more of the same". 

He said:

“It makes sense to have some sort of amnesty available, but HMRC is over-complicating things by fiddling around the edges. One big amnesty for everybody would be a better way to approach the issue. The recent campaigns are targeted, but anybody can use them.”

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By cumbriajan
14th Feb 2012 11:26

? a way round the problem

The way round it would be for all contractors to take on the bricklayers, plasterers etc  with zero hour contracts, then the contractors  can pay them for work done through the books but the the bricklayers/plasteres  will still be "self employed" surely

 

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