What HMRC Know About You !

Don’t worry we’ll make sure you don’t get into trouble!

You may or may not know that…

HMRChave significantly increased the number of tax investigations they carry out.

Not only that…

HMRC’s “breakthrough” computer system, a new, powerful weapon against fraud, tax evasion and avoidance, will ensure that even the most determined are caught eventually.

The system is called as ‘Connect’, and was designed by defence contractor BAE Systems. Although it cost HMRC £45m back in 2010, it has already delivered £1.4bn of additional tax revenues.

So given all of this we thought it would be helpful for you to have the information contained in this article to save you from getting into bother with HMRC.

We think it best to be prudent because…

You may never have had an HMRC tax investigation, but given the government have put HMRC under pressure to collect more tax revenues than ever before, the chances are the even the most careful of Self-Employed/MD Owners will come under HMRCs microscope at some point.

Connect computer power

“6 out of 10 tax inquiries use this system”

The HMRCs powerful tax inquiries computer system is called ‘Connect’.

It’s a very appropriate name because…

HMRC has unrivalled wealth of information about people living in Britain, due in part to its many connections with other databases, such as the Land Registry, Companies House and the Electoral Roll. “HMRC has more data than the British Library”

Not only that…

The HMRC website is one of the world’s biggest websites at peak filing time.

‘Connect’ has access to such comprehensive data that it allows investigators to spot anomalies.

HMRC’s powerful IT system allows Tax Inspectors to build up literally dozens of connections for any one individual. Creating a unique profile about that persons circumstances.

It also makes it much easier for HMRC to check up on individuals’ tax return

HMRC gets information from other organisations
The tax authority’s access to Land Registry and DVLA data means it knows how much someone has spent on their house and can see vehicles registered to each address.

So, if someone has bought a high value vehicle, but lives in a modest flat that might not fit with that individual’s financial affairs.

Maybe an individual owns some properties in their name, but has not declared any income, that would be a warning sign.

The Inland Revenue can easily build up a picture of someone’s financial worth and means that if someone is only declaring £20,000 a year, but is living a £100,000 lifestyle, HMRC can call on that individual to pay more.

What goes ‘on the web’ stays ‘on the web’

HMRC also grabs seemingly harmless information from social networking sites such as Facebook, Twitter and LinkedIn.

If someone is constantly putting up pictures of expensive holidays and flashy cars on Facebook, but is paying minimal tax, then that could trigger an investigation.

HMRC also obtains information from less obvious sources, such as adverts on noticeboards, in newsagents or even stories in local newspapers.

“All media is a valuable source of information for HMRC”

“Fear and guilt on TV, Radio and Billboards”
The tax authorities advertising campaigns are designed to make tax evaders feel rotten about cheating the Exchequer when times are hard.

Ad campaigns emphasise that “the net is closing in“. The latest adverts warn tax cheats to declare all their income “before it is too late”.

There’s More…
Apart from powerful computing systems, and the ability to gather huge amounts of electronic information, the tax authorities also use these tactics……..

Mystery Shoppers…
Tax inspectors also now operate undercover, in disguise, and in teams to root out suspicious behaviour.

Informers and tip-offs…
Embittered divorcees and disgruntled former employees are among HMRC’s sources of useful information.

Overseas property owners….
Higher-rate taxpayers with properties abroad are among those targeted by the 200-strong HMRC affluence unit. This affluence unit has been set a target of raising an extra £560m over the next four years.
As well as overseas property, other investigations involve commodity traders and people holding offshore accounts.

Offshore bank accounts….
In-line with the above, International borders are increasingly meaningless for tax authorities pursuit of outstanding taxes.

Property raid…
In certain circumstances, inspectors now have the power to raid the homes of people they suspect of not paying tax.

Raids last year were 155% up on the previous year. These property searches, tend to focus on individuals who run their businesses from home

Fake numbers….
The “chi squared” test is another tool sometimes used by tax inspectors to check the reliability of reported figures, including restaurants’ sales figures. This test, also known as ‘Benford’s Law’, is a means of testing the randomness of figures.

Basically if numbers are made up, or appear to have some honest anomalies, there is a very good chance that HMRC will spot it and investigate.

So what is the answer?

How can you make sure that peace of mind is never far away?

It goes without saying that instructing a quality accountant is a must.

However HMRCs powers have increased significantly over the past couple of years, and that is set to continue. So even with a good accountant on your side, an investigation can be very stressful, intimidating and take up so much of your valuable time.

What will you do if HMRC decide to investigate your affairs?

We recommend taking out ‘protection insurance’.

We offer our clients insurance against the accountancy/legal costs of HMRC investigations.

We will provide up to £75,000 (through our insurer) in respect of fees incurred by us attending meetings with HMRC or responding to correspondence from HMRC when you are subject to an HMRC check, enquiry, visit, meeting or dispute.

For full terms and conditions, in addition to guidance and advice please about your tax affairs contact us at info@oandk.co.uk, call 020 8686 7756 or visit our website www.oandk.co.uk

Best Wishes and Success

Two Fathers, two sons, one cup final – What could possibly go wrong?

One Night in Istanbul (ONII)

2010 marked the start of an exciting relationship between Owadally and King (O&K) Accountants in Croydon and Big Ears Entertainment (BEE Ltd). Our Senior Partner Farook Owadally, was approached by his fellow directors in BEE to help raise finance for “One Night In Istanbul” a film based on a successful play, written by Nicky Allt and directed by James Marquand.

One Night in Istanbul, (ONII) includes actors Paul Barber (who recently visited O&K Accountants) best known as Denzel in Only Fools & Horses, Steve Waddington, Lucien Laviscount and Marc Hughes. ONII is based around the unforgettable Champions League Final of 2005 between AC Milan and Liverpool F.C. where a sensational comeback was witnessed by millions across the globe with Liverpool winning after going 3-0 down at half time.

The film however can be seen to be more of a family comedy with two cab drivers, Tommy and Gerry, getting involved in a risky deal which entails them taking their sons on a once in a lifetime trip to Istanbul to watch the final. Unfortunately, a perfect trip where Tommy and Gerry can bond with their sons is all too much to believe as the inevitable happens and the two cab drivers get caught up with two ruthless criminals, a bag of counterfeit cash and Hitler’s stolen cufflinks. Much like a miracle was needed for Liverpool to come back from 3-0 down against a formidable team, another miracle was required as not only was Tommy being held hostage but time was running out.Be sure to watch the movie when it’s released and watch the drama unfold.

The role that O&K accountants played in ONII is firstly as one of the executive producers of the film and also as the film’s production accountants. O&K has helped to raise finance for the film by using HMRC’s Approved Enterprise Investment Scheme (EIS) which helps limit the maximum potential risk for Investors to 42p for every pound of their investment, for a 40% taxpayer; for a 45% taxpayer the risk would reduce to 38.5p for every pound invested. The EIS scheme has proved to be attractive to Investors as regardless of the success of the film they can claim back 30% of their original investment into the scheme in Year 1. These are also other benefits of investing into the EIS scheme. More information can be seen on HMRC’s website.

ONII is hopefully set to be a success and will be released sometime in 2014. The partners of O&K have recently travelled with fellow producers, film cast and crew to Cannes for a launch party at Cannes film festival. A video clip of the party can be seen below.

Watch Here

Be sure to also check out ONII’s website and like the Facebook page where you can also see some behind the scenes videos and obtain regular updates on this exciting project.