Myth-busting – Electrical Safety installations Act 202011:19 AM, 3rd August 2020
About A day ago 41
The latest figures for uncollected tax reveal property investors owe £142million from undisclosed letting income and £55million evaded in undeclared Capital Gains Tax (CGT) on land and property sales.
The HMRC report claims that half of the returns submitted by self-employed taxpayers and partnerships had under-stated the true tax liability.
£5.8billion was lost through “inaccurate self-assessment returns from individuals” and £3.2billion through inaccurate PAYE returns.
A further £1.3billion was lost through “ghosts” – people who fail to declare earnings from employment.
It also showed that £1.8billion from “moonlighters” – people who have an undeclared second job.
Other missing billions involve VAT and excise duties.
In many cases, taxpayers celebrate because they have got away with paying tax – but the reality is that behind the scenes investigators and analysts are putting together files to trap offenders.
Tax advisers note that compliance checks relating to property profits dating back up to 20 years are underway – and the taxpayers have long sold the property and spent the money the taxman is chasing.
The Money Centre has already recently reported how HMRC is harnessing technology and a more scientific investigative approach to detecting tax cheats. Click here to view.
If you have had property income and not reported the money on a tax return, then the best course of action is to come clean and tell the taxman.
The likelihood is increasing that your transgression will be discovered – and when it is, expect to pay fines, surcharges and interest that could add up to at least double the tax owed.
Don’t forget that interest accrues on a daily basis from the date the tax became due – generally January 31 following the end of the tax year when the income was or capital gain was received.
The good news is that for coming forward and taking the tax hit on the chin, taxpayers automatically earn a ‘discount’ on penalties and are likely to have an easier ride from HMRC.
If you want to clear your account, don’t throw yourself on the mercy of the taxman – never approach HMRC as a taxpayer to admit unpaid tax without taking advice from a professional adviser.
Tax inspectors are driven by a performance bonus based on the amount of unpaid tax they recover and this can sometimes cloud the process.
A tax professional will act as a referee between you and the taxman to maintain fair play on both sides.
Advisers should also know how to handle an inquiry and negotiate a final payment so you do not overpay any tax you owe.
If you would like further advice on tax or accountancy please call The Money Centre’s Customer Care Team on 01603 894525 and we will be delighted to refer you to our Joint Venture Tax Partners who specialise in property taxation. The initial introduction is a no cost no obligation service.
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