Once every 3 months, HM Revenue & Customs (“HMRC”) publish a list of the tax, and penalties, recovered from “defaulters” in the previous quarter. The list for the quarter to 30th June 2019 has just been published, showing that there were about 120 cases settled. The total tax recovered was £16,501,499.24 and associated penalties of £10,052,697.65. Therefore, penalties are just over 60% of the tax.
There are a number of interesting things to note:
- These published cases are the more serious ones. Therefore, they do not represent the full picture.
- These figures are for a 3 month period. If they were repeated each quarter then this would be a total of just over £66m in a full year.
- The industries represented in the list are very varied. Restaurants and Convenience Stores featured several times, as did the Construction Industry in various guises including Decorators. A sample of the other industries includes Employment Agencies, Accountants (not us!), Letting Agents, Public Houses and off-Licences, and Travel Agents.
- One of the largest amounts listed was tax of £826,246.00 with penalties of £495,747.00. The industry was listed as “Fork Lift Driver”. This was followed by £638,447.88 with penalties of £424,567.84 charged to an “Online Trader”.
- The list contains taxpayers from all locations, including Wilmslow, Preston, Queensferry and Childs Ercoll. There were no local businesses listed in the current quarter. However, a takeaway in Penketh was charged tax of £31,896.00 with penalties of £27,909.00 in the March 2019 quarter’s listing.
There are a number of lessons that can be learnt from the above.
- We have never had a client’s details published, but over the years have had quite a number of client’s selected by HMRC for review.
- The published list are the most serious defaulters. Our selected clients may have had a smaller settlement due to small errors made in their record keeping, or small disagreements in estimates made. In some cases, no adjustments have been required.
- Once selected, there can be a substantial amount of work required in gathering evidence to prove to HMRC’s satisfaction that the returns are accurate. If that work is not done then HMRC will raise a determination of the tax and penalties due, and those figures will be payable unless evidence is provided to prove that they are excessive.
- It is the responsibility of the taxpayer to meet the cost of gathering and presenting that evidence. It is because of this that we offer a fee protection service to all clients.
We consider that everyone in business should carry that protection. We had a taxi-driver client, fortunately covered by insurance, who was faced with a fee in excess of £1,000 to fight a determination in excess of £5,000. His final additional tax bill was about £200. Without that protection, which would currently cost him about £60 per annum including VAT, he would have had difficulty paying either the determination or the costs of fighting it.
STOP PRESS: In our column last month in the sister magazine Warrington Worldwide we mentioned the change in VAT that was to be applied to businesses in the construction industry. This was the introduction of the “Reverse Charge” provisions that was to apply from 1st October 2019. Well, we are pleased to announce that, due to Brexit (apologies for mentioning the “B” word), this change is being delayed by 12 months, and will now be introduced from 1st October 2020.
If you have any queries in respect of this article please do not hesitate to contact us