HMRC Officers to eat into restaurant tax evasion
Thursday, May 12, 2011 | Posted by: Dave Jennings
Categories:
Business advice,
Tax
| Tags: HMRC restaurant taskforce,
Plumbers Tax Safe Plan,,
Tax Investigations,,
HMRC Taskforce,,
Liechtenstein Disclosure Facility,,
Tax Amnesty,
As the drive to restore the public finances to health continues, HM Revenue & Customs (HMRC) has announced the introduction of new trade-specific taskforces which will target those who seek to evade tax, starting with the restaurant trade.
Bread (entree)
Initiatives to combat tax evasion have been coming thick and fast in recent weeks, with the announcement of an amnesty for plumbers, and a new settlement opportunity for those employers subject to HMRC enquiries related to the use of Employee Benefit Trusts.
The new taskforces are the latest in a series of programs that HMRC has launched which target specific industries, such as the Plumbers Tax Safe Plan and the Tax Health Plan for medics which took place in 2010.
Salt ‘n’ Pepa
The taskforces will bring together teams from across HMRC including the Criminal Investigations unit, Special Investigations and Local Compliance for a specified period of time to target evasion in selected trades and geographical locations. The first of these taskforces will focus on the restaurant trade in London, expanding to the North West of England and Scotland later in the year. a further nine trade-specific taskforces are planned for the current tax year, with more being launched next year.
Unlike amnesties such as the Liechtenstein Disclosure Facility (LDF), which aim to tempt non-compliant taxpayers out of the woodwork by offering favourable terms, the taskforces will be actively seeking those who have evaded tax. No formal disclosure facility will be offered, and the full range civil and criminal sanctions will be available to HMRC’s inspectors.
So should those working in the restaurant sector be worried about the prospect of HMRC knocking on its door and trawling through their records looking for problems? Obviously, compliant businesses will have nothing to worry about, but those who have deliberately evaded tax may have a significant problem on their hands.
As well as the financial burden of paying any unpaid tax, interest and penalties, HMRC may seek to use its new ‘naming and shaming’ powers. Those who deliberately evade tax of £25,000 or greater run the risk of HMRC publishing their details on its website. This could significantly harm a business’ or individual’s reputation, especially if picked up by the press. In addition, the risk of criminal prosecution is very real, with HMRC having already announced that it intends to increase the number of prosecutions fivefold.
Humble Pie
Those concerned that they may be at risk from an inspection by the new taskforces should consider making a pre-emptive disclosure to HMRC. While the plumbers amnesty is targeted primarily at the plumbing trade, HMRC has made it clear that similar terms will be made available to others who wish to come forward, so restaurateurs may want to disclose using this initiative. They will have to be quick as the deadline for registering a disclosure is 31 May 2011. Similarly, the LDF, the most generous of HMRC’s amnesties, offering amongst other benefits, immunity from prosecution, may be a useful option for those in the restaurant trade with offshore assets or bank accounts.
Hot Chocolate
What is certain is that HMRC will continue to launch a number of tax investigation initiatives aimed at tightening the net around those who deliberately underdeclare their liability to tax and increasing the departments’ yield. Those determined not to comply will find that there are fewer and fewer places to hide.
For further information on the taskforce initiative click here
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