Spotlight on HMRC – returns can be blooming taxing

Financial blogger Ed Hill, who writes about tax and financial issues for Expressandstar.com, says meeting the tax return deadline can save major headaches.

Ed is a partner at the Walsall office of Baldwins Accountants, working with a wide variety of businesses across the region.

Despite constant criticism, HMRC shows no signs of slowing the introduction of new legislation and new technology to help find 'missing' tax.

The October 31st deadline for filing paper tax returns is just weeks away and HMRC is urging everyone to beat the deadline or face a £100 fine for late filing – even if no tax is due or it has been paid on time.

The introduction of a new penalty regime earlier in the year allows HMRC to impose further increased penalties after three, six and twelve months, if you miss the deadline.

If you think you may miss the deadline, file online instead and you have until 31st January to get it done.

HMRC is also utilizing 'web robots' to probe cyberspace in a bid to root out tax cheats.

This distinctly Orwellian sounding campaign is intended to find targeted information about individuals and companies to identify people who have failed to pay the right tax.

HMRC is targeting the internet to hunt down tax evaders as it attempts to recover around £7 billion it claims is lost to the Treasury each year.

Of particular interest to HMRC are online marketplaces, where it will search for those buying and selling goods as a trade or business, but have failed to pay the tax owed.

People buying or selling just a few items are unlikely to be targeted by this campaign.

Trades people and private tutors, including fitness, dance or lifestyle coaches will also be in the spotlight.

HMRC will match its data with vast amounts of third-party data, to uncover what it calls 'anomalies' between things like bank interest, property income and lifestyle choices.

Those individuals exhibiting such discrepancies will be contacted by enforcement officers.

In other words, if they suspect you are living beyond your declared means, they will be in touch – you have been warned.