Posts tagged ‘Tax Investigations’

HMRC has had much success in collecting large amounts of tax from property related tax investigations recently, giving them more impetus to continue to challenge investors.

In particular, the widely used claim for PPR (Principal Private Residence) relief which significantly reduces exposure to Capital Gains Tax has been making headlines following a high profile debate about MP’s expenses.

Making a house a home

There+s+no+place+like+home_9d95e3_4741424In order to be eligible for PPR relief, you must be able to demonstrate that the investment property was your home at some point during your ownership.

The term “home” is key here, merely paying council tax and redirecting some of your post simply is not enough.  HMRC may require evidence that your personal artefacts were present enabling you to reside in the property with “home” comforts, but of course what makes a house a home is a very subjective matter.

Evidence

Perhaps the current trend of sharing your personal life on Social Media, will become useful after all?

Flipping and switching

If you are what’s known as a “property flipper” (regularly buying, refurbishing and selling on) or have elected to change your principal residence from one property to another, which you are perfectly entitled to, be warned that you may be putting your head above the proverbial parapet.

Protect your eligibility

If you need advice on how to ensure you get the very valuable PPR relief, then please feel free to get in touch.

 

The information provided in this blog illustrates my opinions and experiences, it does not constitute advice and I do not accept responsibility for any actions taken or refrained from as a result of reading this post.

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If you are a tutor, a fitness instructor or make your money by selling through the internet, then the taxman may soon be taking a particular interest in your financial affairs.

More targeted investigations

HM Revenue and Customs (HMRC) is stepping up its tax investigations of specific sectors where it believes tax is being underpaid.

A date for the investigations to launch has yet to be announced and there have been no guarantees of an amnarrow found the targetesty for those who forward to get their affairs in order wish to confess, although those who settle up any unpaid tax early are far more likely to get much better terms than those who are caught out.

Among those targeted will be private tutors and coaches who earn main or secondary income from private lessons, whether they are qualified or not, and ranging from national curriculum tutors to fitness or lifestyle coaches.

HMRC is also interested in individuals who use online marketplaces such as eBay to buy and sell goods as a trader or business without paying the resulting tax. This will, of course, not affect those who buy or sell in low volumes on eBay, such as private individuals selling unwanted items. HMRC is only interested in those who consistently use the online marketplace to make a profit.

Non-VAT registered businesses

Other traders who will come under the spotlight will be those whose turnover exceeds the £73,000 threshold but who have not registered for VAT. Don’t forget that now that the Inland Revenue and Customs and Excise work together as HM Revenue & Customs, they share your business data.

Act early to mitigate penalties

As with any tax matter, it is always better to act now than to wait for the taxman to come calling.

If you fall under any of these sectors then George Hay can help you register with HMRC and get your affairs in order.

Disclaimer: This article is for general guidance only. All taxation planning should only be undertaken after appropriate professional advice. George Hay Chartered Accountants are registered to carry on audit work and regulated for a range of investment business activities by the Institute of Chartered Accountants in England and Wales.

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If you found this post interesting/useful please share it with your social network and/or bookmark it.  Also, your comments are always valued and will help me to write new posts that are relevant to readers of this blog.

If you were among those hit by the new 50p top tax rate back in April, then you could now be more likely to receive a rather unwelcome knock on the door from the taxman.

Proposal

Under plans unveiled by the Liberal Democrats at their recent conference in Liverpool, half of the UK’s 300,000 higher earners affected by the top tax rate face having their tax affairs checked over by HM Revenue and Customs (HMRC).

This means that the number of tax investigations will rise from the current figure of 5,000 to 150,000 a year – an increase of 3,000%.

Why?

The £900 million drive is designed to crack down on tax avoidance, the legal practice of using existing provisions within the current tax regime to minimise your tax liabilities. This should not be confused with tax evasion, where tax liabilities are avoided by illegal means, amounting to tax fraud.

Those who ‘hide’ money in offshore accounts will also come under scrutiny as part of the increased investigations.

As a result of the scheme, the number of criminal prosecutions relating to tax matters is expected to increase five-fold, while the Treasury has announced that it expects the initiative to bring in £7 billion a year by 2015.

While tax avoidance is certainly not illegal, the announcement highlights the importance of seeking professional advice on all tax matters to ensure you do not fall foul of any investigation.

Impact on small business

Even if you have nothing to hide, tax investigations can be both costly and time-consuming, particularly for smaller businesses which have neither the time nor the money to spare.

Need support?

Friendly, approachable, reliable professionals

At George Hay, we can advise clients on all aspects of taxation and can help you ensure that all your tax affairs are in order. We can help you ensure you do not pay too much or too little tax and, should you find yourself the subject of an investigation, can offer as much assistance as you need.

We are also able to offer tax investigation protection. As with any insurance, everyone hopes they will never need to use it, but taking out cover now could save you thousands of pounds in investigation fees should the taxman come calling – money that could be put to better use in your business.

For more information on any area of taxation, including tax investigations, or to find out more about tax investigation protection, please contact us.

The information provided in this blog illustrates my opinions and experiences, it does not constitute advice and I do not accept responsibility for any actions taken or refrained from as a result of reading this post.