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This year’s targets

By admin
01 Apr 2015
Tax Investigation

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):

evasion map

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:

  • Fraudulent VAT repayments in the Nottingham area

  • Fraudulent VAT repayments in the Birmingham, Coventry, Stoke and Wolverhampton areas

  • 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.

2011Restaurant sectorLondon
North West of England
 Fast food outletsLondon
 Fraudulent repaymentsLondon
 Scrap metal dealersScotland
 Construction traders

North West of England

 Individuals/businesses not submitting statutory returnsSouth East of England
 LandlordsNorth West of England
North Wales
 Property transactionsLondon
2012Indoor/outdoor marketsLondon
East Midlands
 LandlordsEast Anglia
North East of England
 Public houses and nightclubsScotland
 Hair and beauty businessesNorthern Ireland
 Motor tradeSouth Wales
South West
North East of England
 RestaurantsSouth Wales
South West
 Legal professionLondon
 Grocery and retailSouth Wales
North Wales
South West of England
 Hair and beautyNorth East of England
 RestaurantsSouth East of England
 Motor tradeScotland
 Rag trade (manufacturing, wholesale, retail and textile recycling)Midlands
North Wales
North West
 Alcohol industryScotland
 LandlordsSouth East of England
2013Tax evasionLondon
South East of England
Northern Ireland
 Jewellery tradeMidland
 Fast food outletsEast Anglia
 Haulage industryMidlands
 Fishing industryScotland
 Holiday industryCornwall
Isles of Scilly
South Wales
North Wales
Lake district
 Construction industryLondon
 Security guards, bouncers and their employersLondon
South East
 Hidden wealth/means issuesMidlands
 Fraudulent VAT repayment claimsScotland
Northern Ireland
2014Property tax evasionSouth West
South Wales
 Hidden wealth/means issuesLondon
East Anglia
East Anglia

Disclosure facilitiesClose date
Employee benefit trust settlement opportunity31 March 2015
Solicitors settlement opportunity9 June 2015
Lichtenstein disclosure facility5 April 2016
Crown dependencies disclosure facilities
(Isle of Man, Jersey, Guernsey)
31 December 2015
UK GAAP partnerships and sideways loss reliefOngoing
Let property campaign: targets residential property letting marketOngoing
Second incomes campaign: aimed at employees not declared additional untaxed incomeOngoing
Credit card sales campaigns: aimed at individuals or businesses that accept credit or debit card paymentsOngoing
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

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