Wasn’t Kafka a tax inspector?

Wasn’t Kafka a tax inspector?

Some have commented that our recent letter to clients on tax is like reminding them that murder is illegal. We do not disagree (on either point).

A few weeks ago we wrote to all of our clients telling them that HMRC is in touch with authorities all over the world and will heartily pursue anyone who does not make accurate returns of their income here and abroad.

So what’s going on here?

In January 2017 HMRC instructed all accountants to write to their clients telling them that over 100 countries are now exchanging financial information and they are after cheats. No change in law, a massive slap in the chops to the presumption of innocence by our own government and a £3,000 fine for any financial firm failing to comply by 31 August.

A fair moan? Not entirely – we have heard of taxpayers ‘fessing up to overseas stuff of varying degrees of triviality through to one or two quite meaty cases.

Having investments offshore is not wrong.  But it is wrong not to declare all taxable income and gains on your UK tax return. 

On 5 September 2016 HMRC launched a digital Worldwide Disclosure Service (WDS) to allow anyone who wishes to disclose offshore income and gains giving them 90 days to make a full disclosure.

And at home – within the next 18 months all vat registered businesses will be required to share their internal accounting data with HMRC every time they file a vat return.

As well as inviting self-reports HMRC are committed to raising more revenue through Investigation and Enquiry and we are starting to see an increase in this area.

In spite of tax office redundancies not only is the number of enquiries opened rising but “informal contact” by HMRC is also being used to raise revenue.

A full tax enquiry needn't raise a penny in extra tax, but spending thousands of pounds to prove it isn't going to make anybody happy.

Which is why here at Scodie Deyong LLP we are strongly recommending that all clients insure against the cost of Investigation and Enquiry by a simple Fees Protection Insurance cover.

For as little as £200 per annum this covers Individuals or Companies in the case of professional fees on enquiry by HMRC. Included in the cost is also an HR helpline giving our clients legal advice on employment matters at no extra cost.