HMRC today 13 May 2013 announced a crackdown on the restaurant trade in Northern Ireland, using their various strands of information to decide which businesses need looked at.

This is unfortunate timing by HMRC - given the difficulties the hospitality industry is facing at the moment.  The government should be encouraging Northern Ireland business not deciding to hit them when they are down.

If you feel your business is at risk of being investigated - whether you have done anything wrong or not - please call Felicity Huston or Adrian Huston on 028 9080 6080.  If you are already being investigated please call Felicity Huston - a former Tax Inspector who used to investigate businesses for HMRC.

HMRC press release follows:

Crackdown on tax dodgers in Northern Ireland

A taskforce tackling tax dodgers in the Northern Ireland restaurant trade was launched today by HM Revenue and Customs (HMRC). The taskforce is expected to recover £2.9 million.

David Gauke, the Exchequer Secretary to the Treasury, said:

“This taskforce is targeting people who are not playing by the rules. Most people pay what they should. The Government has made it clear that we will not tolerate tax evasion and HMRC will crack down on those who seek to break the rules.

“HMRC has brought in more than £70 million since the initial taskforces were launched in 2011-12. They expect to bring in over £90 million from taskforces this year.”

HMRC’s Jennie Granger, Director General Enforcement and Compliance, said:

“Most people and businesses voluntarily comply, so it is important we deal firmly with those who don’t.

“Using our award-winning tool, Connect, which brings together over 30 different sources of information, we are able to target specific industry sectors and geographical areas that present the highest risk of tax fraud.

“The message is clear - if you choose to defraud the tax system or seek to evade tax, we can and will track you down. You will face not only a heavy fine, but possibly a criminal prosecution as well.”

Taskforces are specialist teams that carry out intensive bursts of activity in specific high-risk trade sectors and locations in the UK. The teams may visit traders to examine their records and carry out other investigations.

Taskforces are a result of the Government’s £917 million spending review investment to tackle tax evasion, avoidance and fraud from 2011-12, which aims to raise an additional £7 billion each year by 2014-15.

If you know anyone who is evading their taxes, you can tell HMRC via the Tax Evasion Hotline by phone, on 0800 788 887, by email or by post.

Notes for editors

1. Last year HMRC brought in £20.667 billion of additional revenues from tackling avoidance, evasion and criminal attack

2. Follow HMRC on Twitter @HMRCgovuk

3. HMRC’s Flickr channel www.flickr.com/hmrcgovuk

Issued by HM Revenue & Customs Press Office

(HMRC Press release ends)

Link to BBC radio article on tax avoidance included later.

Weekly we hear stories about how people are avoiding tax by using legal means and tax loopholes.  There is an entire industry around minimising tax for large companies and wealthy people.  On the other side of the fence HMRC has teams of people trying to stop or outlaw such tax avoidance practices.

In early May 2013 HMRC announced it is stepping up efforts to tackle transfer pricing.  This is the process where international countries adjust the price of goods and services they send from one country to another.  Thus they raise expenses in the high tax country, keeping profits and tax low, and equally increase sales and profits in the low (or no) tax country.  For example Bermuda has zero corporation tax.  Where do you think most of Google's profits end up?

Many people, including the UK Public Accounts Committee, are agitated by the aggressive tax avoidance engaged in by many large companies, and most of the World's largest businesses.  People feel that if the big companies paid more then individuals could pay a little less.  Some other people (many employed by the big companies) are concerned that if the UK becomes less welcoming from a tax perspective then UK jobs will be lost and work will move to a more sympathetic country.

Lobbying organisations like UK Uncut continue to expose what they see is unfair tax policy and abuse of the system by some businesses.  For example as regards Starbucks here.

The April 2013 BBC Radio 4 piece called 'Tax avoidance: The hidden cost' is an excellent expose of how Google, Starbucks and others minimise not only their UK corporation tax bills, but in fact their tax World-wide. It explains in fairly simple terms how money moves around the globe leaving very little tax in the countries it passes through.  For example over 70% of the World's biggest companies use the Netherlands to reduce their tax bills.  Hear how in the programme, link below.

These days people in Scotland and Northern Ireland are calling for a lower corporation tax rate in their country. Nothing is likely to happen before the Scottish referendum on independence takes place.  However two major concerns arise with having different rates in parts of the UK:

• Brass-plating - this is where companies register themselves in the low tax country, but in fact bring precious-little in the way of jobs or investment to that country.
• Tax avoidance - using the techniques described in the programme, and many others, the companies moving to a part of the UK exploit tax rules and still end up paying very little UK tax

The BBC radio programme has been saved onto YouTube to prevent it being lost, and if you can spare the time you will enjoy it here.  Also at www.tinyurl.com/taxavoidanceBBC 

Tax Return fines – how does £10 per day sound?

George Osborne has his calculator out. 500,000 people who are yet to file their 2011/12 Tax Return. From Wednesday 1 May 2013 they will start getting hit with penalties of £10 per day! Yes – per day. Well the Coalition needs to get money from somewhere.

Are you one of them? If so you need to act quickly to file your Return online. If you can’t face it then have someone help you.

By the way don’t make the mistake of filing a paper return. The deadline to do that was 31 October 2012. Filing on paper now means you leave yourself liable to £900 in daily penalties.

Let me explain.

• Miss a filing deadline and there is a £100 fine.
• File your return more than 3 months after the deadline and you are liable to £10 per day in flat penalties. That’s for every day over the 3 months.
• The deadline for paper filing was 31 October 2012, so 3 months late meant 31 January 2013.
• File a paper form after 30 April 2013 and you are a full 6 months late leaving you 90 x £10 in penalties.
• On the other hand the deadline for online filing was 31 January 2013 so 3 months late means 30 April 2013.
• File the 2011/12 return online on 1 May 2013 and you are liable to one daily penalty of £10. Procrastinate until 30 May and the fines are 30 x £10 = £300, and so on up to £900.

In the old days many of these Self Assessment penalties would go away once you filed your Return and there was no tax actually due. No more.

Now if you get hit with these penalties they stick – even if in the end you have no tax bill. So move Heaven and Earth to get that 2011/12 Tax Return filed soon – very soon.

If you don’t have (or cannot find) the User ID and password needed to file online, we have software which will let us do it for you – within a day or two.

Adrian Huston, a former tax inspector, is a director of Belfast tax and accountancy firm Huston & Co – www.huston.co.uk or 028 9080 6080.

I am a former Tax Inspector, also ex RMP (TA) and Police Authority Northern Ireland. I now sort out non-residency for hundreds of guys from the UK deployed abroad. Check me out on Linkedin at http://uk.linkedin.com/in/adrianhuston

New rules from April 2013. There is intended to be new legislation for 2013/14 bringing in a new Statutory Residence Test. In the past residency has been assessed using some HMRC booklets and was not actually enshrined in law. This changes things and in my view for the better.

For most of the people for whom I work this is a genuine improvement because if working abroad full-time there will be no more lingering concerns about whether the person has substantial ties to the UK. It ceases to be a concern if you have been deemed ‘automatically non-resident.'

The law will not be passed until after the March 2013 budget, but just last month HMRC published its ‘Guidance Note: Statutory Residence Test (SRT)’ on how it plans for the law to work , unless Parliament interferes before Royal Assent, which is unlikely. It is at
http://www.hmrc.gov.uk/budget-updates/11dec12/stat-res-test-note.pdf

For most UK guys in CP around the World they qualify as non-resident (automatically overseas) under the third test on page 5 as follows:

"Third automatic overseas test
11. You work full-time overseas for the tax year without any significant breaks from that overseas work, and:
• you spend fewer than 91 days, excluding deemed days, in the UK in the tax year, and

• the number of days in the tax year on which you work for more than three hours in the UK is fewer than 31.

The full-time overseas part of the test does not apply to you if you are an international transportation worker."

I claim credit for changing HMRC’s policy by one day – to the advantage of members of this Group! See the 'fewer than 91' above. That’s how the old rules talked.

When HMRC launched its consultation
(http://www.hm-treasury.gov.uk/consult_statutory_residence_test.htm see page 12)
they said non-residence if fewer than 90. In my formal consultation response I pointed out that this was a pointless loss of one day. It moved away from the long-held understanding of the importance of 90 UK days being allowed to make it 89. I am therefore delighted to see that the HMRC December 2012 draft has corrected the matter. It is expected to be mentioned in the UK Budget March 2013 and then go into law for 2013/14.

Note the old averaging rules are gone - so from 6 April 2013 make sure your UK days are always fewer than 91.

So, in summary, if you work full-time abroad on CP work (or non-CP work indeed), your work extends over 2 x 6 Aprils, and your UK days are 90 or fewer per full tax year, then the April 2013 rules are not scary for you.

You will still have to complete the necessary paperwork or have someone help you, record your UK days and - very important - keep records and proof of leave spent outside the UK.

Stay safe, and keep your tax affairs safe too.

Adrian Huston, a former tax inspector, is a director of Belfast tax and accountancy firm Huston & Co – www.huston.co.uk or +44 (0)28 9080 6080    Skype Adrianhuston

History was made today 21 February 2013.  HMRC published its first ever list of people who have fiddled their taxes but not been prosecuted.  Up to now if you were caught fiddling then in over 99% of cases HMRC just took a lot of money off you – and your secret was safe.  Only HMRC, your accountant and you would know. Only a tiny number of people are taken to court each year.

The gloves are off now and HMRC today used its new law for the first time.  They held back on spoiling Valentines Day last week!

HMRC hopes that by naming and shaming tax-fiddling businesses, some of which might be in your town, people will be encouraged to be more careful to declare all that they earn.  By the way when I say fiddling I am also referring to people who have failed in their tax obligations, and as a result HMRC did not get its tax when it should, and as a result HMRC charged penalties.

I will give a link to the list shortly, but firstly I want to set out the ground rules, and explain why the list will get much longer each quarter that it is published.  The ground rules:

• The tax has to be paid late as a result of failing to declare it, or understating one’s income
• The inaccuracy or failure must be for a period after 31 March 2010. (For individuals this mainly means the 2010/11 or 2011/12 tax years).
• The offence can relate to income tax, Capital Gains Tax, corporation tax or VAT.
• This one’s important – even when coming clean to HMRC the person still did not make a FULL disclosure.  In other words they were silly enough to continue to play cat-and-mouse with the tax-man.
• If HMRC had not found out about the problem, the loss of tax would have been at least £25,000.  Note this must all be after 31 March 2010.
• The law states that once the name and shame details have been published for 12 months the publication must cease.

The inaugural list 21 Feb 2013 of significant tax defaulters can be read at http://www.hmrc.gov.uk/defaulters/defaulters-list.pdf

What should you be aware of when reading this list?

1. Firstly the list shows the name and address, at the time of the offences, plus the tax which wasn’t declared on time, plus the penalty levied. It shows the period after 31 March 2010 for which the penalties applied.
2. Secondly when you add up the tax and the penalty you will know some of what HMRC needed paid, but you may not have the whole picture.  For example there may be interest added as the tax is paid late.

3. Much more significantly – the traders may owe an awful lot more.  This is because HMRC can only tell us about the tax owed after 31 March 2010.  Most tax investigations go back a number of years – even up to 20 years.  Just because HMRC says they owed £30,000 and paid a £15,000 penalty doesn’t mean that’s the lot.  The trader might owe tax from 1992 to 2012 of £500,000, of which only £30,000 relates to the last year or two.

Why do I say the list is going to get longer every quarter a new one is published?

Even though names only stay on the list for 12 months, I know the list will get longer as the years go by.

At the moment HMRC can only publish where £25,000 of tax would have been lost since 1 April 2010 – less than three years.  Think forward two years to May 2015.  By then HMRC can name and shame you if you owe £25,000 in tax over a 5 year period. So the bar is getting lower every year.

£25,000 in 5 years – is that a lot?  Well if you pay tax at 40% and you failed to declare £20,000pa of your income then the tax and National Insurance would be at least £5,000 per year. So if caught in May 2015 you could find your name address and tax amounts published.

Do you think the local papers might run a wee story about the tax defaulters in their area?  You bet they will!

What lessons can we draw from HMRC naming and shaming tax defaulters?

If you yourself are fiddling – then if you stop now then chances are your tax after March 2010 will never exceed £25,000.  So even if you are caught, or come clean, your name will not be published.

If you go forward to HMRC to admit something – or HMRC catches you – then tell them the whole story.  Don’t hold back or fail to admit to some assets or bank accounts.  If you do the local press may come sniffing!

If you have something to confess to HMRC, or if they are onto you, seek tax specialist help NOW. We often take on cases from the regular accountant, settle the tax investigation, then hand the case back to the accountant for ongoing normal accounts work.

I have already had to advise some of our tax investigation cases about the naming and shaming rules, and consider whether our client stands to have their name publicised.

Contacting Adrian Huston:

As a potential client – call 028 9080 6080 – outside office hours 9-1 and 2-5 there is a voicemail.

Media and interview requests – in office hours call 028 9080 6080, outside office hours media can contact Adrian here:

http://www.huston.co.uk/media-contact.html?sTask=message&r_id=1439957649&task=display&pf=4

It’s the phishing season again.  Since lots of people filed their tax returns in recent weeks, the criminal fraternity is out to benefit.  They are sending out emails suggesting people are due refunds.

Should you read no further, get this – HMRC NEVER EMAILS TO SAY YOU ARE DUE A TAX REFUND.

Read on if you want some background.

We all see these emails which purport to come from our bank and to alert us to something.  It’s great when we know we don’t have an account with that bank – we know it’s fake.  The situation is less clear where the supposed sender is your own bank, or some ‘trusted’ organisation like HMRC.

What these people want to do is have you read the email and click on some link.  Therein lies the problem.  Click on the link and you might be downloading something nasty to your computer.  It might start telling someone what keys you press (hence revealing your passwords and indeed all correspondence). This is called key-logging. 

The other thing the email will try to trick you into doing is entering your security details or bank / card details.  The surprising thing then is that rather than nice stuff happening, you find your bank account has been cleared out, or charges put on your card.

So what’s the tax angle on all of this?

At various times of the year, but especially in February and March, emails arrive saying they are from HMRC.  They can have convincing email addresses, HMRC logo, all the right colours etc.  These generally say that having reviewed your tax affairs you are eligible for a tax rebate.  Sometimes they talk about your ‘fiscal activity’ – not even the most nerdish civil servant would use such a phrase.  They invite you to click a link and/or download a form to process your rebate.  They will also say exactly how much you are due.  Bit like PPI texts – putting an amount of money in the email makes the thing seem attractive.

I received one of these emails this week and it was better than many at trying to trick me.  It quoted what looked like a legit HMRC email – I won’t give the address the oxygen of publicity!  It was even signed off by a named member of staff, with a Western sounding name.  My email did however have some clues:

• The day was spelled incorrectly
• I know that HMRC email addresses (used only by the chosen few) have .gsi in them
• It talked about ‘fiscal activity’
• It quoted a rebate number which was not my tax ref
• The amount was shown as J123.45 rather than £123.45, and, most importantly,
• I know that HMRC never emails about refunds. 

By the way I predict these fraudsters might move onto threatening emails about tax bills.  Again I stress HMRC will not email you about a tax demand.  Only if your specific tax debts are the subject of ongoing correspondence might a named HMRC officer give you their email address.  Then it would be OK to use email, but this would be extremely rare.  Correspondence about tax debts will come by post. (Or in person if you are really naughty!)

ACTION PLAN

• If you receive one of these emails then forward it to HMRC (who are daily closing these things down). Simply forward the email to [email protected]
• If you have received an email and may have entered personal details like User ID, national insurance details or tax reference then you must contact a different part of HMRC at [email protected]
• If you have supplied bank details for your ‘refund’ then contact the bank asap.

So in summary:

1. HMRC never ever emails about tax refunds.
2. HMRC will not email you about tax debts.
3. If you get such an email report it as above.
4. Never click on a link in an email supposedly from HMRC about your tax position.

Adrian Huston, a former tax inspector, is a director of Belfast tax and accountancy firm Huston & Co – www.huston.co.uk or 028 9080 6080.

This December and January I have noticed far more people worried about the fact that they have not submitted their 2011/12 Self Assessment Tax Return. Why, I wonder, are there more people worried than before?

 I have a few thoughts:

• Last year the 2010/11 Returns were the first where penalties stuck even if your late return showed no tax due.
• Late filers got stung with £1,300 (which won’t go down) in fines for being 6 months late – not something you would incur twice!
• Rarely a week goes by without a big tax story in the news.
• January 2013 saw the changes to child benefit – bringing tens of thousands of people into annual Tax Returns for 2012/13.
• In 2012 HMRC finally took a high-profile tax evasion trial – Harry Redknapp – albeit HMRC lost. See http://youtu.be/HsjAOdIDz9g  To find out how Harry's dog was involved - view this light-hearted 2 min video http://youtu.be/mysNp0X52kU

Thankfully even in the last few days of January, some tax advisers and accountants (ourselves included) are sufficiently organised that they can still get your 2011/12 Tax Return in on time – saving you the £100 initial penalty. Even if you are not registered for online filing.

Occasionally I hear people say ‘Rather than pay an accountant I think I will take the fine and not bother sending in a form.’ Let me set out what will happen to them.

1. Probably sometime in late February 2013 HMRC will issue a £100 penalty. This does not come down if little or no tax is due.
2. Once the Return is 3 months late another penalty system starts. This time it’s a DAILY penalty of £10 per day, for the next 3 months. So that’s £900 by 31 July 2013. Plus that first £100.
3. Then once the return is 6 months late a further penalty applies. It is at least £300. If, once the tax is known, 5% of the tax is more than £300 then the penalty is raised to 5% of the tax. So by August 2013 a late filer has at least £1,300 of non-negotiable penalties to pay.
4. When the Return is eventually submitted, then there are tax-based surcharges and interest.
5. If the right amount of tax was not paid on 31 January 2013 then interest is charged until it is paid.
6. If all the 2011/12 tax was not paid by the end of February 2013 then will add a surcharge of 5% of that unpaid 2011/12 tax.
7. Further 5% surcharges kick in after 6 months and 12 months.

So all things considered, avoiding sending in your Tax Return is short-sighted and could be very very expensive. HMRC will still hound you for the Return, and the penalties will bring tears to your eyes. Your other half will be pretty pissed off too!

Remember that after October you must file your Tax Return online or else the above penalties apply for a later paper return. To file online you must have received, in the post, a User ID from HMRC. Apply now and it will arrive within a couple of weeks!

Note that it is impossible for an individual to file their own Return online if they haven’t got this User ID and online access to their HMRC account.

On the other hand accountants with their fancy software can file a Tax Return for nearly anyone online, even if HMRC has not yet received an authorisation for them to be your accountant. This is the solution for many people.

What should you do then?

1. If you have the online User ID and password – then file the Return by 31 January 2013, midnight. Or go to a professional with it – see (d) below.
2. Estimate some figures if you have to. Tick the box 20 on page 6 to say some figures are estimated or provisional. Enter in Box 20 on page 6 why they are estimated and when (if ever) you will get more accurate figures.
3. If you haven’t got your online access stuff then go to a professional who has the software to file for you, and the time to help you before the deadline.
4. If you want professional help with your return, and have the online codes, then bring them along to the accountant. By you logging into your account and putting in their special (Government Gateway) reference, then by the next day or two they will be fully able to talk to HMRC about your case.
5. If you think you owe tax and have not got a payslip, still send HMRC what you think you owe. This will save you interest and surcharges, even if something prevents you filing the return at the moment. You would still get the penalties. See here for how to pay http://www.hmrc.gov.uk/payinghmrc/selfassessment.htm

 Don’t get hit with nasty penalties by the tax-man. You pay them enough already! Take action before 31 January 2013. It’s worth it. 

Adrian Huston, a former tax inspector, is a director of Belfast tax and accountancy firm Huston & Co – www.huston.co.uk or 028 9080 6080. He can still get your Tax Return filed in the last few days of January!

CHILD BENEFIT - SPECIAL OFFER: For a special flat fee of £99 (including VAT) we will register you with HMRC and complete the 2012/13 Tax Return for you.  This only applies if Child Benefit is the ONLY reason you need to submit a Self Assessment Return. Call 028 9080 6080 or email [email protected] 

Child Benefit Chaos – a guide

Child Benefit is changing for over a million people.  Are you one? Did you do what you needed to by Sunday 6 January 2013? How do you sort this mess out?  Read on...

Does this affect me?

1. Do you or your other half get child benefit? YES / NO
2. Does one of you earn over £50,000 in taxable income per year? YES / NO

If you answer YES to both then you should have done something before 7 January 2013. Did you?

VIDEO on this - http://youtu.be/D3R694xhu98

What needed done by 6 January 2013?

If, due to one of you earning over £50,000, you are affected you should have done one of the following:

• Cancelled the Child Benefit claim to stop the new rules making life complicated, or
• Decided that you, the higher earner, will complete a Tax Return each year that the household gets Child Benefit. This means you must have noted that the onus is on you to register with HMRC so they know to send you a Tax Return in April 2013.

If one of you earns over £50K and you DIDN’T cancel the Child Benefit by 6 January 2013 then, unfortunately, the high earner MUST complete a 2012/13 Tax Return.  This applies even if you cancel the benefit in mid-January.  Though at least by doing so there would be less Child Benefit clawed back.

So, in simple terms, what’s this all about?

To reduce government spending (by some £2 Billion) the Chancellor has decided better-off families should not have the advantage of Child Benefit.  To achieve this he decided, in conjunction with HMRC, that the easiest way was to hit households where one party earns £50,000.

If one party earns over £60K then, in the end, all the advantage of having child benefit will be lost.  Between £50K and £60K the advantage is gradually taken away.

The problem is that not even HMRC knows all the people who are affected by this.  They don’t know all your sources of income unless you already fill in an annual Self Assessment Return. Also for some people they will not have an up-to-date address.  So of the 1.2 million people they wanted to write to about this big change, some 300,000 people were not contacted.

But it isn’t fair!

Correct!  Nobody is claiming it is fair.  It is a very blunt instrument designed to take the advantage of child benefit away from better-off families.

The main unfairness arises with looking only at individual income, not the combined income of the couple.

Example of the unfairness:

Say Ms Jones earns £60,000 then she and her non-working partner will not gain from continuing to receive Child Benefit. Indeed she may have to fill in a Tax Return each year – an added hassle.

Say her neighbours Mr & Mrs Smith each earn £30,000 then their Child Benefit claim is unaffected and they have no tax worries.

So despite the same household income, one couple loses out big time.

There is nothing to be achieved thinking about the unfairness of this system, just work out if you are affected and do what you need to do. (Write to your MP if you want the system changed.)

My income is over £50,000 – what happens?

Unless you ask to have your Child Benefit cancelled, nothing will happen.  You will keep getting it.

You have however got a tax problem. Unfortunately all Child Benefit earned from 7 January 2013 becomes taxable – at a rate from 0% up to 100%.  The rate rises according to your income. 0% at £50K up gradually to £100% if your income is £60K or above.

What this is doing is taking off you a tax bill which has the effect of clawing back some or all of the Child Benefit you got.

How does HMRC get the Child Benefit back?

Important – it is up to you to register with HMRC for Self Assessment using form SA1.  That is the only way they will know to send you a Tax Return.  Only by completing that Return will they get from you that part of the Child Benefit which the government wants back.

You MUST register by 5 October 2013, though I suggest you do it today.  You can download the SA1 form at www.hmrc.gov.uk/SA1

Failure to register with HMRC leaves you liable to a penalty.

What income counts?

All income which is taxable, so that is the total of:

• Pay from jobs (P60 figure if you get one)
• Benefits in Kind from jobs (like company car, private medical cover)
• Taxable profits from a business
• Dividends
• Bank interest
• Taxable rents from letting out property

What if we can’t be sure one of us will earn over £50,000?

This will be common for people who are self-employed, or whose overtime or bonuses vary each year.

In this case you should continue to take the Child Benefit.  If, at the end of the tax year, you discover one of you has income over £50K, then you need to register for Self Assessment and fill in a Return.  If your income is below then you are in the clear for that year.  You still need to check each year.

I already complete a Self Assessment Return each year. What do I do?

For you things are simpler.  If you know your come will consistently be over £60K then you might as well just stop your Child Benefit claim.

Otherwise just continue claiming it.

If, once the year is over, you know your taxable income exceeds £50K then you must put the Child Benefit figure into the relevant box on your Tax Return – or ask your accountant to do it.

For the 2012/13 year only put the benefit received from 7 January 2013 to 5 April 2013.  In future years you would declare the full year’s Child Benefit.

Further reading on HMRC site:

More on this subject  www.hmrc.gov.uk/childbenefitcharge

To stop your Child Benefit www.hmrc.gov.uk/stopchbpayments

Estimate how much you will be charged on your Child Benefit https://www.gov.uk/child-benefit-tax-calculator

HMRC’s Child Benefit Helpline is 0845 302 1444.

MY VIDEO on this - http://youtu.be/D3R694xhu98

Note the person to fill in the Stop Child Benefit online form, or phone to have it stopped, must be the person who receives the Benefit.  Even if it is their other half who is the high earner.

If you might be affected don’t dig your head in the sand.  Failure to understand things now will only cause you headaches in the future.

Adrian Huston, a former tax inspector, is a director of Belfast tax and accountancy firm Huston & Co – www.huston.co.uk or 028 9080 6080.

PS: If you or your partner earn over £50,000 per year, and one of you gets child benefit, these new rules affect you.

If you failed to stop the child benefit by midnight Sunday 6 January 2013 then you MUST register to complete a Self Assessment Return for 2012/13.

SPECIAL OFFER: For a special flat fee of £99 (including VAT) we will register you with HMRC and complete the 2012/13 Tax Return for you.  This only applies if Child Benefit is the ONLY reason you need to submit a Self Assessment Return. The fee is payable before we register you with HMRC.  If you have registered yourself, the offer still applies.  The fee is payable up-front, that is when you ask us to do the Return for you.

Call 028 9080 6080 or email [email protected]

The Daily Telegraph reported on 9 November 2012 that that same week a bank whistleblower had grassed up 4,388 UK people with accounts at HSBC in Jersey.

HMRC has, unusually, confirmed that they have received this information and will be using it to check the tax rules ‘are being respected’. What a lovely phrase!

What have HMRC been given?

Details of over 4,000 people in the UK who had money in HSBC in Jersey, sometimes known as HSBC Expat. This means their name, UK address and the amount in the HSBC account.

The average balance in the accounts disclosed is £337,000.

Whose accounts are these?

The accounts are held by a wide range of people from people who are now retired to senior figures in the City, to criminals of various sizes.  They will doubtless be from all parts of the UK.

My own experience as a Tax Inspector, and more recently as a tax consultant, tells me that people in Northern Ireland have a particular attraction to putting their money in Jersey, Guernsey or the Isle of Man.

Should everyone named be scared?

Absolutely not.  There is nothing illegal in having money in Jersey or anywhere else offshore.  Wat is illegal is not paying the right UK tax.  The tradition of banking secrecy surrounding the Channel Islands, Switzerland, Leichtenstein and the Isle of Man has encouraged certain behaviour.  This behaviour may, in itself, be illegal.

So who has something to fear?

You should worry if the existence of your money offshore points to some form of illegal activity, including tax evasion.  This could mean:

• The source of the money invested was not properly declared and taxed, or
• The means of obtaining the money invested was itself criminal (drugs, guns, bribery etc), or
• The interest earned on the accounts was not declared.

This last point is interesting.  We help a lot of people to declare offshore savings and income, sometimes going back many years.  In some cases the original source of the money is completely legit.  For example the life insurance when your spouse died, or a transfer from a UK savings account.  Where people have come unstuck is that once the legal money was offshore they failed to declare the interest it earned.  That then becomes illegal tax evasion.

If you have an undeclared offshore account...

Now is the time to confess to HMRC – that is before they come to you.  In general you will be given an easier time if you come forward to HMRC to tell them something was wrong with your tax affairs.  You will also generally pay a lower penalty – that is what is added to the bill as a percentage of the tax you owe.

Who will help me with this?

I would say a person who declares offshore income without professional help has a fool for a client.  This is a case where expert help may save you thousands, and will get the matter closed more quickly. (These are stressful experiences.)  You may feel that your regular accountant does not have the practice and expertise in handling such tax investigations.  It is for this reason that we are often brought in.  When the case is closed we then hand the client back to the regular accountant to continue with routine tax returns and preparing of business accounts.

And if I am on HMRC’s list and do nothing?

Then you simply check the post every morning wondering when HMRC will write to you.  Of course they might call in person or phone your accountant.

What HMRC will NOT do is email you about your offshore account.  If you get an email from HMRC with an allegation (or good news about a refund) then the email is false and should be reported by forwarding it to [email protected]

This is just the latest of a range of banking disclosures HMRC has received from whistleblowers – some of whom were paid substantial rewards.  (See video here). It seems this is likely to continue and whoever still has offshore money hidden should be afraid.

Adrian Huston, a former tax inspector, is a director of Belfast tax and accountancy firm Huston & Co – www.huston.co.uk or 028 9080 6080. He and his former Tax Inspector wife Felicity Huston specialise in handling tax investigations and disclosures to HMRC.

Adrian also appears on TV radio and in the press commenting on tax matters. See www.YouTube.com/HustonTV 

HMRC is paying many thousands of pounds each year to informants who tell them about people who are not declaring all of their income. 

Paid informants received £373,780 in 2011/12 which was well up on the previous year’s £309,620.

This information was obtained thanks to the London law firm Reynolds Porter Chamberlain LLP (RPC) who extracted it from HMRC under the Freedom of Information Act.

One of RPC’s partners Adam Craggs said “Typically, an HMRC informant will be an angry spouse during divorce proceedings. For the spouse, threatening to supply information to HMRC provides them with some leverage during divorce settlement negotiations. If the divorce is particularly acrimonious, it is not uncommon for a spouse to turn HMRC informant.”

And how right Mr Craggs is. I know from my time working for the Revenue that one of the most valuable informants is an aggrieved former spouse. I recall specific cases where these spouses came into the tax office to provide very detailed information about the tax-fiddling of their estranged other half. I recall one woman confirming we had all the information we needed, then announcing “Right then, now I’m off to the dole office!” This was because the guy was also fiddling his benefits. A woman scorned...

VIDEO ON THIS: http://youtu.be/ljX2jcf1gVk

In my days in HMRC there was no prospect of paying informants. People told you stuff about suspected tax evasion for a variety of reasons, for example because:

• they felt it was the right thing to do
• they were jealous that they couldn’t fiddle their taxes
• they had been annoyed by your business (perhaps they live nearby)
• you did a shoddy job for them for cash
• you used to employ them
• you and they used to be in a relationship and it’s over

People still call in a local tax office (if they can find one) to share information about tax fiddling, and they also write to HMRC, either giving their name or just dishing the dirt anonymously.

HMRC has set up a Tax Evasion Hotline 0800 788 887 which is staffed 0800hrs to 1800hrs Monday to Friday. This is a confidential number so you can report someone who you suspect is not paying the right amount of tax. By the way, before calling, see how much you can gather to help identify the suspected fraudster, like name, address, vehicle number, mobile number, landline number.

As with any confidential supply of information, HMRC is aware you may have your own motives for making the call. They also know that what you say is suspicious may turn out to be innocent, or may be properly declared. Nevertheless they will consider everything you tell them.

Again from my experience as a Tax Inspector I recall investigating people where we had anonymous information in a letter making various allegations. Many of the allegations turned out to have an acceptable explanation, but there were very useful nuggets which turned a dead-end investigation into a fruitful one.

Nowadays the Tax Evasion Hotline even allows you to inform on someone over the internet – using the form at www.hmrc.gov.uk/tax-evasion/hotline.htm You must supply an email address that HMRC can use to send you an acknowledgement. If you don’t supply that then they will ignore what you are saying. They will not however contact you for further information.

On the other hand if you are happy to be contacted for further clarification, then there is space to leave your fuller contact details. Given how easy it is to set up a gmail account, this effectively means you can give your information pretty-much anonymously.

As for becoming one of these paid informants, I haven’t a clue how you go about it. I know in the past some of the money HMRC paid was to obtain, from former bankers, lists of offshore account-holders from the UK. As for who the recent payments went to, it’s anybody’s guess as HMRC has the whole process cloaked in secrecy. If your information helps bring down a big-scale tax fiddler then there might be scope to get paid for your help. I guess if you wanted to see if a reward might be payable you should make that clear in your first contact with HMRC. Also keep a note of when you phoned and any reference you are given. This would help if in the future you wanted to claim your information helped HMRC bring down Mr Big.

Are there any lessons to learn now you know HMRC pays informants?

1. Don’t fiddle your taxes.
2. Don’t let others know you fiddle your taxes – even your spouse or closest friends.
3. If you are fiddling, then stop.
4. The longer you are stopped the more chance you might get away with it.

Wonder how much HMRC will pay people for tax evasion intelligence this year?

VIDEO ON THIS: http://youtu.be/ljX2jcf1gVk