HMRC TASKFORCES AND INITIATIVES “Set to close the tax gap”


HM Revenue & Customs is under huge pressure to increase tax revenue and “close the tax gap”. The government has made £900m available to HMRC to tackle non-compliance in the UK tax system. It is expected that this investment will generate up to £7bn per annum of additional tax revenues. To achieve this target, HMRC has commenced an unprecedented number of compliance activities to identify and challenge those who it believes have not paid the correct amount of tax.


HMRC has improved its systems and made use of “clever technology” to help make their information gathering processes more effective. This allows the Inspectors of taxes to be more equipped and have access to more readily available information. Therefore HMRC investigations are becoming more targeted and direct.


HMRC taskforces and initiatives will focus on various business sectors, identify key trading trends and aim to expose offenders.


Penalties in such cases can be up to 100% of the undeclared taxes.


HMRC are more likely to investigate if:


  • Your industry is targeted by a HMRC taskforce or initiative
  • Your tax returns are late estimated or incorrect
  • Your income levels are inconsistent
  • Your costs are abnormally high for businesses in your industry
  • Your income levels are inconsistent with your standard of living
  • You have offshore bank accounts
  • You have income from land and property
  • You operate in a high-risk industry
  • HMRC receives a tip-off


    • HMRC encourage voluntary disclosures

    If you have a voluntary disclosure to make, our tax team can help you to secure the best possible outcome. Our tax team use their experience and skills to assess your case on an individual basis.


  • We will identify at the outset how an approach to HMRC can best be made.
  • We will prepare your voluntary disclosure and discuss potential liabilities with you.
  • We will negotiate with HMRC on your behalf and obtain the best possible result.

    • An investigation by HMRC can cause stress and anxiety. It can be extremely disruptive to an individual and their business. Our team has spent many years successfully operating in this sector working alongside senior tax professionals who have operated within HMRC. We have the technical ability to resolve matters quickly and secure the best results for individuals and their businesses.


    Our tax team will make you aware of your principle rights and obligations. Appoint our tax team to deal with your case immediately. To speak to someone confidentially, call our helpline on 0131 516 3708




    IR 35


    In the world of Contracting you may be worried about IR35, and how it may affect you. But before you start to panic about getting a massive tax bill you need to understand what the IR35 regulations are and what they mean to you.


    IR35 may apply:


    If you own more than 5% of a limited company and a single client contributes 60% or more to your turnover, you have a contract between your limited company and that client, you work in the client premises, using client equipment and under their control. Then you may well be in ‘disguised employment’ according to IR35 legislation.



    The following steps will allow you to minimise your exposure to IR35:


  • Get an IR35 ‘friendly’ contract drafted.
  • Get business stationery and other paraphernalia designed and printed.
  • Have a website built.
  • Setup a home office or rent a virtual office.
  • Get a dedicated business phone number, even a virtual phone number.


    • These are all allowable expenses and not only reduce your tax liabilities but:

  • Make your contract more compliant.
  • Avoid falling within the scope of IR35.
  • Create a professional business image and commercial brand.
  • Appeal to a larger audience and potentially win larger contracts.
  • Use our expert systems and take the test to assess your level of risk!!!!


    • Allowable expenses:



    Accommodation


  • The cost of hotel or bed and breakfast accommodation can be claimed as an expense, as can the reasonable cost of additional meals taken in conjunction with overnight accommodation. There are no set allowances for accommodation but the cost must be deemed to be 'reasonable'; this also applies to the cost of meals.

  • Pensions are big news as they represent one of the few remaining tax breaks available to contractors. You can invest part of your income into a Company pension scheme. You save not only the income tax that would ordinarily be payable but due to the pension contribution, your employers and employees national insurance contributions are lower than they would have been. The amount of tax relief can be as much as 48% meaning that for each £100 invested you pay £52 and the tax man pays the rest.

  • You can claim actual meal costs whilst you are working at a remote site, away from your normal place of work, or when staying away from home overnight, but daily, round sum claims for meals are not permitted.

  • Providing the training course is wholly and totally relevant to the performance of your duties under your existing contract then you can claim this as an expense


    • Travel costs


  • You can claim the cost of travel to and from your temporary place of work. Mileage rates are 45p per mile for the first 10,000 miles in any fiscal year and then 25p per mile thereafter. This allowance is to cover fuel and running costs of the vehicle. If you are travelling to work as a passenger in a car you are entitled to claim 5p per mile. You can also claim for parking and the congestion charges but you may not claim for parking fines or speeding fines. The cost of travel by public transport can be claimed but you must have a valid receipt. A mileage allowance can also be claimed for travel by motorcycle and bicycle at rates of 24p per mile and 20p per mile respectively.


    • Workwear



  • You cannot claim for ordinary clothing which would form part of an 'every day' wardrobe even if you would not be likely to wear your working clothes anywhere other than at work.


    • What if I’m inside IR35, what expenses can I claim?


    If your contract is caught by IR35 then the only expenses claimable are:

  • Administration expenses which are fixed at 5% of your contract income

  • Travel and accommodation expenses

  • Pension contributions

  • Professional subscriptions

  • However we do recommend you to record and receipt all business expenditure.

    • Do I need to keep my receipts?


    We will always advise all contractors to retain all vouchers and receipts:

  • All Accountants will require site of them to prepare annual accounts.

  • It is a mandatory requirement from HM Revenue and customs, who stipulate records should be kept for seven years.

    • Click here to take the IR35 test to know your risk Level.