HMRC launches new campaign targeting white collar professionals
HMRC has launched a new campaign targeting white collar professionals as it continues its high profile clampdown on underpaid taxes. Solicitors are now being urged to come forward and voluntarily declare any unpaid tax before a June deadline or face hefty penalties.
Many accountants have reported to us that HMRC is broadening its range of targets. The Solicitor’s Tax Campaign, announced in December, is another reminder that HMRC is now scrutinising taxpayers from all walks of life. It is not focusing solely on those working in traditional cash-in-hand businesses such as electricians or taxi drivers.
As most accountants will know, HMRC now possesses sophisticated technology to justify its widening lines of inquiry. The £45 million database system ‘Connect’ gathers real time data to help it identify groups where tax avoidance may be an issue. It draws data from multiple public and private sources, including: banks, local councils, Legal Aid data and even social media.
A notable proportion of solicitors are self-employed and it is the smaller, owner-managed practices which are likely to form the main focus of this particular clampdown.
HMRC will be aware that many smaller legal practices are currently under considerable financial strain because of the reduction in Legal Aid spend.
HMRC has collected a total of £1 billion from voluntary disclosure campaigns focused on specific job sectors since they began in 2011. The campaigns mean that a wide range of taxpayers are being scrutinized. Conventional targets- as well as white collar professionals- are increasingly coming under the spotlight. Past schemes have targeted doctors, plumbers and personal tutors.
Penalties for those who fail to participate can be severe. In this latest campaign, offenders can expect to pay a fine of 100% or more of the amount of tax owed. In the very worst cases, criminal prosecution may follow. Taxpayers who take part and meet deadlines can expect more attractive settlement terms.
Recent HMRC activity makes it clear that any client who is self-employed or from a job sector targeted faces an increased risk of investigation. HMRC is following all possible leads as it strives to increase revenue.