Birthdays, tax evasion and this year’s targets
It would be nice for HMRC to send its customers birthday cards. I recall an attempt to be friendlier so I don’t think it is too big a request for HMRC to set up a Moonpig account and send us all a birthday card. Instead on my birthday this year (6 February) they issued an online map pinpointing tax cheats around the country together with their crime and sentence. I’m not taking it personally.
Wouldn’t it be interesting, bearing in mind managing client’s risks, to know where HMRC perceive widespread tax risks?
HMRC’s interactive map “allows people to see the impact of HMRC’s enforcement work”. It also shows where either HMRC have been more active or where there are more customers evading tax.
You will see from the map below that there is a clear concentration of efforts or evasion in the Midlands and of course the South East. You would expect the South East to be more active although the concentration in the middle of the country was a little bit of a surprise when I first saw this (don’t worry though they are moving to the South West and Wales):
The map shows convictions resulting in jail sentences since April 2013 so it does not accurately reflect the true position because only a small proportion of cases result in criminal prosecution. The number of prosecutions is forecast to continue increasing (29% increase from 2012/13 to 2013/14 and 47% from 2013/14 to 2014/15!) so the map will look a little more crowded soon.
It is promised that the tool will be extended to include non-custodial sentences since April 2013. A little unfortunate this has not already occurred since it would identify the genuine activities undertaken by HMRC. The information on non-custodial sentences is to be added throughout 2015. We are over a quarter through the year and I am still waiting!
The interactive maps also show the locations of HMRC taskforces since they were introduced in 2011. The tool may allow an adviser to identify whether their client is potentially being scrutinised under a coordinated HMRC taskforce project or otherwise.
HMRC taskforces are specialist teams that concentrate activity and pool knowledge on specific high-risk trade sectors and locations in the UK. HMRC’s Risk and Intelligence Service (RIS) is responsible for receiving and exchanging information with other government departments and researching and identifying campaign and taskforce targets.
Taskforces only target taxpayers where HMRC has a strong suspicion of evasion. As previous articles allude, the “suspicion” is formed following the careful analysis of data (remember the award winning data analytical tool developed by cyber fraud specialist BAE – Connect?).
HMRC holds one of the largest database (if not the largest) UK databases on individuals and businesses. The ability to compare similar profiles is only one small element to collating information. HMRC have the ability to match information from different sources (third parties) to taxpayers. The information powers contained in Schedule 23 Finance Act 2011 allow HMRC to obtain widespread information for the purposes of checking tax compliance without naming a particular person or notifying them. The most notable use of the power was pursuant to the let property campaign where property agents were served with a request for details of landlords and rent paid etc.
The latest taskforces are aimed at:
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Fraudulent VAT repayments in the Nottingham area
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Fraudulent VAT repayments in the Birmingham, Coventry, Stoke and Wolverhampton areas
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Property tax evasion in the South West and South Wales
The property taskforces are targeting those who have sold one or more properties and have not paid capital gains tax or disclosed rental income. HMRC reports that over £12m has already been raised through similar taskforces operating in London, South East England and Yorkshire. It has also been suggested that there are currently eighty criminal investigation cases as a result.
The table of taskforces and campaigns at the end of this article demonstrates where HMRC perceive risks. Where a campaign has been successful in a particular area of the country, it is intended that the campaign be replicated in other areas of the country. In 2014/15 approximately twenty taskforces were in action and this is expected to continue for this tax year.
It is prudent to consider the past taskforces and whether a client could be subject to an enquiry if and when the taskforce is implemented in their area (it is likely it will). If a client is at potential risk it may be worth instructing our services to undertake an in confidence risk review: we adopt a similar approach to how HMRC undertake risk reviews although provide some useful commercial benefits for the client.
| Year | Taskforce | Region |
| 2011 | Restaurant sector | London North West of England Scotland |
| Fast food outlets | London Scotland |
|
| Fraudulent repayments | London | |
| Scrap metal dealers | Scotland | |
| Construction traders |
North West of England |
|
| Individuals/businesses not submitting statutory returns | South East of England | |
| Landlords | North West of England North Wales |
|
| Property transactions | London | |
| 2012 | Indoor/outdoor markets | London |
| Taxis | Yorkshire East Midlands |
|
| Landlords | East Anglia London Yorkshire North East of England |
|
| Restaurants | Midlands | |
| Public houses and nightclubs | Scotland | |
| Hair and beauty businesses | Northern Ireland | |
| Motor trade | South Wales South West Yorkshire Nottinghamshire North East of England |
|
| Restaurants | South Wales South West |
|
| Legal profession | London | |
| Grocery and retail | South Wales North Wales South West of England |
|
| Hair and beauty | North East of England | |
| Restaurants | South East of England Solent |
|
| Motor trade | Scotland | |
| Rag trade (manufacturing, wholesale, retail and textile recycling) | Midlands North Wales North West |
|
| Alcohol industry | Scotland | |
| Landlords | South East of England | |
| 2013 | Tax evasion | London South East of England Northern Ireland |
| Jewellery trade | Midland | |
| Fast food outlets | East Anglia | |
| Haulage industry | Midlands | |
| Fishing industry | Scotland | |
| Holiday industry | Cornwall Isles of Scilly Devon Somerset South Wales North Wales Lake district Blackpool |
|
| Restaurants | Lincolnshire Tyneside |
|
| Construction industry | London Midlands |
|
| Security guards, bouncers and their employers | London South East |
|
| Hidden wealth/means issues | Midlands | |
| Fraudulent VAT repayment claims | Scotland Northern Ireland |
|
| 2014 | Property tax evasion | South West South Wales |
| Hidden wealth/means issues | London East Anglia |
|
| Restaurants | London East Anglia |
| Disclosure facilities | Close date |
| Employee benefit trust settlement opportunity | 31 March 2015 |
| Solicitors settlement opportunity | 9 June 2015 |
| Lichtenstein disclosure facility | 5 April 2016 |
| Crown dependencies disclosure facilities (Isle of Man, Jersey, Guernsey) |
31 December 2015 |
| UK GAAP partnerships and sideways loss relief | Ongoing |
| Let property campaign: targets residential property letting market | Ongoing |
| Second incomes campaign: aimed at employees not declared additional untaxed income | Ongoing |
| Credit card sales campaigns: aimed at individuals or businesses that accept credit or debit card payments | Ongoing |
| UK GAAP corporates and sideways loss relief: relates to a tax scheme(s) | Ongoing |
| Sole traders and sideways loss relief: relates to a tax scheme(s) | Ongoing |
| Film production and sideways loss relief: relates to a tax scheme(s) | Ongoing |
| Contractor loan settlement opportunity: relates to a tax scheme(s) | 30 June 2015 |
