The Taxman's new task forces

HMRC has launched five new investigation task forces with more to follow. They will carry out targeted tax enquiries. Who are these aimed at and how do they differ from normal investigations?

Yet more checks

Businesses are already being subjected to a barrage of extra record checks and investigations under systems introduced by HMRC during the last year or two. This is all part of the government's big plan to squeeze an extra £7 billion annually by focusing on tax avoidance. This is equivalent to more than £2,000 extra tax per business. If the Taxman could be relied on to only hit tax evaders it would be a good thing, but in practice businesses taking legitimate steps to reduce their tax bills are likely to be caught up in this latest raid.

Who's under fire?

The good news, if you can call it that, is that for now the five new task forces are aiming at very specific targets:

South East England - the non-filing of tax returns for Corporation Tax, Income Tax, PAYE and VAT.
Landlords in North West and North Wales - tax evasion by landlords. Landlords who own or rent more than three properties will be targeted.
The construction industry in the North West - a task force will target construction traders who are self-employed or who run their own companies, where under-declaration of sales or over-claiming expenses is suspected.
Scrap metal dealers in Scotland - the Taxman sees these businesses as generally more likely than average to evade tax.
Fast food outlets in Scotland - the Taxman believes that there are a substantial number of these businesses falsifying their records and not declaring their full turnover.

More targets

Apart from the task forces mentioned, the Taxman intends to aim another at electricians nationwide and one at property transactions, residential and commercial, in the Greater London area. The first of these has just started while the latter begins its work in February.

Trap. Businesses not yet targeted shouldn't be complacent as the Taxman is ramping up his investigations generally so making sure you maintain your high standard of record keeping is essential. The Taxman makes no secret that where he finds incomplete or poor record keeping he also expects to find that insufficient tax has been paid.

What's special about task forces?

Normal investigations concentrate on one tax, e.g. Corporation Tax, VAT or PAYE, but a task force investigation will cover all taxes relevant to the business. This makes this type of enquiry more difficult and time consuming to deal with.

Tip 1. It's never too late to take action to reduce your chances of being selected for an investigation, and our quick guide to avoiding enquiries can help you identify the likely problem areas so you can rectify them (see The next step).

Tip 2. Unless you can hold your own against the Taxman in a technical tax argument, we recommend involving your accountant at the earliest stage of an enquiry. It may cost you in the short term, but taking the right steps at the outset will shorten the enquiry process and has been shown to reduce the overall cost.

Those in the South East who are late with tax returns, landlords and the construction industry in the North West, scrap and fast food industries in Scotland, and all electricians are targeted. Task forces will look at all tax aspects of a business. Getting your accountant involved from the start can reduce the overall cost of an enquiry.

If you would like to talk about tax investigations in more detail or would like some advice please contact us on 0191 386 4786 for a free initial meeting

The Taxman's new task forces

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