Reply to: Hiding Income from the Taxman

[cojak]

This thread has gone as far as it can go I think, same question same replies ad nauseum.

[MarillionFan]

From what I understand, the amounts involved are likely to be about a couple of grand a year in unpaid tax, so not a great amount. Much less than I would care to bother with myself, but my "friend" has asked the question, so I've put it to the forum.

It's acquaintance actually, not "friend". She's my psychologist.

Well, if it's not great amount why not pay it back with some small penalty and sleep well at night?

A mistake has got much smaller penalty than tax evasion.

The trolling on the professional forums recently has become quite tedious. Neo/(all other accounts you are using) please **** off and crawl back under the incredibly tedious rock you've crawled out from.

[AtW]

From what I understand, the amounts involved are likely to be about a couple of grand a year in unpaid tax, so not a great amount.

Well, if it's not great amount why not pay it back with some small penalty and sleep well at night?

A mistake has got much smaller penalty than tax evasion.

[Guest22]

From what I understand, the amounts involved are likely to be about a couple of grand a year in unpaid tax, so not a great amount. Much less than I would care to bother with myself, but my "friend" has asked the question, so I've put it to the forum.

It's acquaintance actually, not "friend". She's my psychologist.

[AtW]

Decision on whether to prosecute is likely to depend on how much money at stake and behavior during investigation - "forgetting" to declare small amount is one thing, but creating deliberate cover up is totally different thing.

It's best to assume HMRC will go all the way.

So if your "friend" did not pay all tax due then best to pay smaller penalties now than take chances with much bigger ones in the future. If the amounts in question are large then ask your "friend" to talk to a good tax lawyer.

[Guest22]

AtW, please may I ask that replies on this thread are kept on-topic and dispassionate, and should you feel the need to release some frustration, please do so at the gym or otherwise.

Is anyone else able to actually answer my question?...

If an investigation is made and tax is found not to have been paid, but no measures were taken to hide it (albeit it was "missed" off the SAR), in addition to demanding the tax + interest + penalties, how likely is he to prosecute for anything?

[Guest22]

malvolio, OK, it's tax evasion or whatever you want to label it. The question still isn't answered... If an investigation is made and tax is found not to have been paid, but no measures were taken to hide it (albeit it was "missed" off the SAR), in addition to demanding the tax + interest + penalties, how likely is he to prosecute for anything?

[MarillionFan]

Personally I think there's more money in drugs & prositution.

[malvolio]

Interesting stuff. I guess if the Detica software has access to everyone's bank accounts and transactions, then it could easily pick up patterns or changes in patterns such as a regular payment from person A to person B suddenly changing to person C, immediately implying a relationship between person B and C. Is this how it might work?

The question still hasn't been answered though - if an investigation is made and tax is found not to have been paid, but no measures were taken to hide it, in addition to demanding the tax + interest + penalties, how likely is he to prosecute for anything?

Ermm... "No measures taken to hide it" means it was fully declared on the annual SAR. Not doing that is evasion. That's kinda how self assessment works. I'm at a loss to understand why you find the concept so difficult to grasp. Unless you're Greek, of course...

[Guest22]

Interesting stuff. I guess if the Detica software has access to everyone's bank accounts and transactions, then it could easily pick up patterns or changes in patterns such as a regular payment from person A to person B suddenly changing to person C, immediately implying a relationship between person B and C. Is this how it might work?

The question still hasn't been answered though - if an investigation is made and tax is found not to have been paid, but no measures were taken to hide it, in addition to demanding the tax + interest + penalties, how likely is he to prosecute for anything?

[IR35FanClub]

I worked for HMRC a few years back - they were just getting this software from Detica at the time...

Meeting the tax challenge
BAE Systems Detica
HMRC web snooping software slammed by privacy campaigners - Digital Lifestyle - Macworld UK

Some of the BAs were reporting back about what it can do and how much revenue it had recovered just in a pilot programme deciding which data sets to feed it.

You've been warned! Or your "friend" has ;-)

After that - I decided not to get too clever and stick to a simple - Ltd Co and don't try and hide stuff or be clever. I'd to think the money I've earned is mine to keep and not be constantly worrying that one day I'll get a knock on the door from Hector/MI5!

[escapeUK]

As for "not finding out", not a hope in hell. HMRC can see bank accounts, all deposits over £5k are declared by the bank anyway, the accountant will query and report any obvious irregularities in the accounts such as end balances not lining up and there are now reciprocal agreements with all the offshore banks about full disclosure. Hiding income from someone like the CSA isn't that hard, hiding it from HMRC is close to impossible.

You must deal with a mythical competent HMRC. The one I deal with routinely send me demands for NI (but no amount) despite paying myself below the NI level and my accountants calling them 3 times to remind them of this fact.

At clientco they made a mistake in the year end payroll, the system was restored and redone. We then needed to know what we had originally submitted, HMRC were unable to tell us! Pay us what you originally told us. Its wrong. We dont believe you. Why did you believe the first submission? Pay us. A nice letter. Ignored. Pay us. 18 Months later still wasnt sorted.

Next year clientco made a mistake in year end p11d submission (they employ a lot of numpties with misplaced confidence). HMRC send new tax codes out to everyone who had p11d expenses. A call from the accountant proved futile and the advice was get every single person to ring up personally and we'll do it that way.

So to think that they can actually join up the dots on purpose on something complicated is pure fantasy.

My advice to your friend? "Cash is king."

[xoggoth]

Get her to send me all her money. I will hide it from the taxman for a suitable fee.

[SueEllen]

If a bank, other financial institution, lawyer, accountant, estate agent and a few others thinks your friend's other friends/family members are money laundering for someone they have a duty to report them.

They will now also stop doing business with the individual.

In the case of banks being given up to 21 days to remove your money and find another home for it while your accounts are frozen apparently isn't a good experience.

So if she wants to evade tax then she shouldn't drag other individuals into her mess.

[cojak]

Let's hope that HMRC go after these types before they try IR35, there's a much better return on their efforts than that.