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Taxman's sums add up to more investigations

I think I am still allowed to call "him" the taxman in today's politically correct climate. It is not a statement of fact, simply a term of endearment.

Just in case you haven't caught up with this piece of news here it is.

Most people I know pay tax. I pay tax and I'm an accountant. There is nothing morally wrong with paying tax and yet not everyone does pay tax. Apparently there is a gap between the amount of tax that is theoretically collectible and the amount that actually is collected. I'm not talking here about people taking their time in handing over the cash, I'm talking about profits and earnings that seem to be escaping the taxman's sticky fingers altogether.

We're not talking a few million or even a few hundred millions. The gap is 40 billions.

Yes that's right. £40,000,000,000 - depends of course on what you mean by a billion.

It's not really my task here to understand how the taxman can be so inefficient: he just is - these are government figures not mine.

This massive shortfall can lead to only one thing a further increase in the level of investigations HMRC carries out every year.

Inspectors are targeted to collect increasingly large amounts from taxpayers who are suspected of incorrectly completing their tax returns. It all sounds nice and cuddly though the way they say it. "We want to help taxpayers get it right" as if they actually cared.

In 2008-9 governments' own figures for tax take from tax investigations was £12.075 billion and almost half of that £5.1billion came from ordinary tax inspectors working with ordinary small businesses. That's almost an 18% increase on the previous year and this year, by April 2011 they want to collect an additional £7 billion from investigations activity.

What this means for you and me is a greater chance of getting pulled out of the investigations hat. And it's no longer just income tax or just VAT, the new style investigations cover the whole range of taxes you and your business are involved with. So a single investigation could cover Corporation Tax, PAYE and VAT as well as your own Self Assessment return.

The ngm1scot blog has a faintly amusing, cautionary tale about an investigation interview.

Over this last year we've worked with a number of customers who were unfortunate in getting selected for investigation and none of them had taken up our tax investigation service which starts at just over £120. In one case they ended up paying over £2k in fees. So don't get caught out this summer find out more about our tax investigations service and all the extra high value stuff you get as well. We can't stop you being investigated but we can definitely save you some money.

JohnF

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Jenibelle on December 30, 2011

Yo, that's what's up turthuflly.