Tax investigations: An update
Guy Smith discusses how the landscape for tax investigations has changed over the past 12 months.
With the government promising HMRC a further £800m to pursue non-compliance and tax evasion, and 46% of HMRC staf involved in enforcement and compliance work, tax investigations should be at the forefront of your practice's thoughts. A lengthy tax enquiry can wreak havoc on the finances of your clients, and negatively impact you client relationship as defence fees mount up. So how has the enquiry landscape changed over the past 12 months?
According to HMRC's calculations, the current tax gap is £34bn, with:
- 44% of the tax gap attributable to SMEs.
- 12% down to individuals failing to declare and pay the right amount of tax.
Many people are already aware of HMRC's award winning Connect technology which helps identify risks on tax returns submitted by individuals, partnerships and companies. Connect matches information held by other government agencies, tax evasion reports made by the public, social media profiling and data provided by third parties such as banks and letting agents to name a few.
HMRX is now moving all information into a single storage space called the 'enterprise data hub', where tax staff will see everything they need to know about an individual in one place. The new hub will give HMRC the capacity to store 960 terabytes of data - ten times more than the current capacity and 20 times more than the Hubble Space Telescope has collected over the past 20 years.
Protecting your firm
In the event of a client enquiry, it is important that your client can afford a thorough defence to ensure they pay the right amount of tax. Fee Protection Insurance from Abbey Tax is designed to protect both your firm's profitability from discounted or waived fees, and your client's finances, offering them complete peace of mind from unexpected representation fees.