Tag Archives: Fee Protection

HMRC Plan To Scrap Business Record Checks

shutterstock_141007105HMRC have announced their intentions to scrap the Business Records Checks that have been consistently criticised by the Chartered Institute of Taxation for being ineffective.

The checks were originally introduced to allow HMRC to visit and confirm that a business is keeping sufficient information on its income and expenses in order to produce an accurate tax return. For businesses with inaccurate records, there is currently a potential £3,000 fine on top of any unpaid tax, interests and penalties.

Julie Walsh, Tax Manager at PM+M, said; “The reduction in unnecessary HMRC interventions is great news for businesses, but business owners should not forget that it remains crucial for businesses of all sizes to keep records up to date and in good order to protect themselves against any HMRC enquiries and tax demands.”

HMRC investigations can be very costly even if companies have up to date records. One way that we support our clients with this is in providing fee protection insurance to cover any professional fees that may be incurred in the event of an unexpected investigation or HMRC intervention.  This means we can spend time helping clients through the process and defending against HMRC challenges without the client facing a bill for our time.

For more information or advice on protecting your business, or for a fee protection quote, please get in touch with our tax team by emailing tax@pmm.co.uk or calling 01254 679131.

HMRC Seeking More Access To Information From Third Parties

shutterstock_163502132Government consultation is currently in progress on further steps to tackle the hidden economy by increasing HMRC powers to access data from third parties.

At present, HMRC can access data on bank and credit/debit card transactions. The plan is to extend that to include data held by third party trade facilitators such as electronic payment providers and business intermediaries (including those allowing customers to make orders, purchases or reservations relating to goods, services or digital content).

The move comes as a response to the perceived £5.6bn of missing tax from the hidden economy, of which HMRC plans to utilise its data gathering powers to recoup £860m by 2020/21.

It has been highlighted that the data would be used for identifying compliance issues with businesses, and not the transactions of individual customers. Although, bulk information can be used as an independent check against the data that taxpayers themselves report to HMRC.

HMRC also believes that gathering this information will “reduce errors and improve overall compliance”. Since the start of HMRC’s existence, they have been increasingly pushing for more powers and capturing more data has been important to clamping down on tax avoidance.

Although this may not directly affect you, this highlights the progress HMRC are making in their acquisition of personal data. Having spent years developing software (known as Connect) that seeks links between individual taxpayers and businesses, income, assets and transactions. This will be another stepping stone in HMRC’s plans to seek out discrepancies and recoup some of the missing £5.6bn tax.

The exact format of the new powers and the date they will come into effect is not yet known.  It seems inevitable, however, that HMRC’s powers will increase.

For compliant businesses, the new measures should, in theory, not be an issue. However, the problem is that access to more data can cause tax enquiries to take even longer and cost more in professional fees whilst taxpayers prove to HMRC that all their affairs are above board.

For more information or advice on protecting your business from any fees that come with an HMRC investigation, please get in touch with our tax team by emailing tax@pmm.co.uk or call Julie Walsh on 01254 679131.

How Well Does The Taxman Know You?

How well does the taxman know you

 

Do you ever wonder what the taxman actually knows about you? The answer is quite a lot. HMRC have spent years developing software that scours banks of data for personal and commercial information. The software (known as Connect) seeks links between individual taxpayers and businesses, income, assets and transactions. Connect will then match its findings against the information the taxpayer has provided through their tax return. Discrepancies are flagged and could prompt a tax investigation.

This all happens in a matter of seconds and searches are undertaken repeatedly to capture new information. Here’s what the taxman knows about you:

Your income and pensions – The main feature of Connect is to hunt for income discrepancies. It will have information on your bank balances and income and it will match this with other information detailed in your tax return and PAYE data submitted by your employer.

Your property – HMRC has access to Land Registry databases. This means they know the price you paid for a property and who your mortgage lender is, if you have one. By having access to these records, HMRC can cross-reference stamp duty records and identify where capital gains have arisen and not been reported.

Your business – HMRC have the ability to look through a four year credit card history of small businesses.  This means that the taxman can check that your disclosed expenses match up with your electronic record.

Your bank accounts, savings and investments – banks and financial institutions report the interest paid to individuals across millions of accounts to HMRC. This data will then be analysed by HMRC’s Connect to detect undeclared, taxable savings income.

The taxman will also have eyes on your pension contributions. If you are claiming tax relief and you are disclosing this on your tax return, Connect will want to see a parallel increase in the balance held by your pension provider.

Connect’s powers don’t just end in the UK. From September 2016, HMRC will have access to files held by banks and financial institutions based in British overseas territories, such as the Channel Islands. This will expand to global accessibility by 2017.

Will it be successful? – It has been so far, as the number of tax investigations triggered by Connect is increasing, however, can this continue to be efficient on a global scale? Many do have their doubts as there is a possibility that some of the data could be inaccurate, potentially causing an increase in the numbers of pointless and costly tax investigations.

Ever heard of Fee Protection? – Fee protection insurance protects you from fees you may have to pay if HMRC launch an investigation into you or your business. It’s that simple. With some enquiries running into tens of thousands of pounds, it’s better to be safe than sorry.

For more information or advice on Fee Protection insurance, please get in touch with our tax team by emailing tax@pmm.co.uk or call Julie Walsh on 01254 679131.

Businesses Risk Costly HMRC Investigations without Fee Protection Insurance

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It is important that businesses are aware they risk financial loss and unnecessary stress if they don’t have adequate fee protection insurance to cover professional fees incurred in unexpected tax investigations.

We work with clients from across the North West and the whole of the UK, recently we undertook a survey of over 2,000 businesses looking at how many of them have fee protection insurance. Our findings showed that just 21% of private clients (including partnerships, sole traders and trusts) and 16% of corporate clients were adequately covered.

HMRC tax investigations can be deeply intrusive, time consuming and can drag on for months or even years. If a business is subject to an investigation, significant professional fees can be incurred which means costs can spiral and are in addition to any subsequent tax, interest and penalties which become payable. HMRC is expected to increase the number of tax investigations that it carries out over the next 12 months – both via random selection and industry specific targeting.

Some of the most common disputes include: HM Revenue and Customs income tax and corporation tax enquiries, the Construction Industry Scheme, VAT, NI Contributions and PAYE issues. The aim of fee protection insurance is to cover all the costs incurred by specialists in defence of an enquiry from the Revenue authorities.

Jane Parry, our lead tax partner at PM+M, said: “Issues around tax have dominated the news agenda for some time now. HMRC has stated its intention to clamp down on non-payment of due tax so the number of investigations is almost certainly set to rise. Any business could be subject to a snap inspection so people shouldn’t put their heads in the sand to the potential risks.

Jane added: The authorities don’t always get it right but the onus is on the taxpayer to prove their innocence which can mean huge and unsustainable costs. It’s therefore vital for taxpayers to ensure they’re protected and adequately covered should they get a knock on the door from the tax man.  Having fee protection insurance in place gives our clients complete peace of mind that we will be able to spend as much time as necessary to fight their case without it costing the earth.”

For further information, or advice on this, please contact Jane Parry jane.parry@pmm.co.uk or contact the tax team on 01254 679131.