Construction, haulage and taxi firms in HUGE tax hit!

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2015 has been a sensational year for the taxman. The "taskforce" is a special arm of HM Revenue & Customs, established with the aim to collect an extra £50m for the public purse. Since April, the 27 new taskforces established this year have far exceeded expectations – already raking in £109m to the Treasury.
HMRC

So why has this year yielded such positive results? Experts say their success is due to HMRC flexing its new powers to access information that employers and websites, such as eBay, hold about their workers or customers.

"There's widespread concern that new powers could be abused, but the latest figure shows that they are clearly working and supports the Revenue's case to control our finances," said Richard Morley, of accountancy firm, BDO.

"If a taskforce has weapons in its arsenal it will use them – and this will prove a strong deterrent to would-be evaders," Mr Morley said.

As a result of the ever-increasing volume of information gathered by its “Connect" computer system, HMRC is now obtaining extensive, detailed data about the financial affairs of UK taxpayers.

The taskforces also know where the missing revenue can be collected from. Typically, those targeted have been individuals such as landlords and the self employed - it has been clear to see who lives a life outside of their reported means. However, HMRC knows that the 'tax dodgers' can be harder to catch than those who make careless mistakes through a lack of control or understanding. People who deliberately try to evade the tax authorities will work hard to cover their trail. Those with little control or a lack of knowledge leave the door open to their errors.

What is a task force?

The estimated 350-strong team also have the power to turn up, unannounced, to any business to inspect its premises and accounts - without a search warrant.

"We are using state-of-the-art digital tools to help us to identify and target high-risk areas," said Jennie Granger, HMRC's head of enforcement.

"We have an increasing amount of intelligence and this yield of £109 million – almost double the figure made in the same period last year – shows that our strategy is working."

Construction workers, taxi drivers and self-employed workers making bogus claims on their tax returns – for example for journeys they never made – are among those targeted this year.

See an interactive map of what trades are targeted and where

It is not just bogus claims for travel that did not happen that the taskforces target. Untaxed and thus unlawful private travel in company-owned commercial vehicles and pool cars is another easy source of income of the taskforce. A recent YouGov survey commissioned by ABAX found that 99.8% of company owned commercial vehicles are not taxed as private benefits to the employees.

Take the construction industry for example. As a contractor, your van is an essential tool of your trade. The van is almost always given to the employee so that they can travel directly to and from their home and job sites. The business then has little control over what the vehicle is actually used for outside of the employee's working day. It is not an unusual tactic for taskforce teams to conduct their research by actively seeking out sign written vans in supermarket car parks and other recreational venues during weekends and evenings.

Once private use has been established, companies with little or no control over their vehicle fleet have a torrid time in proving to the taskforces that no significant private use happens. With fines from incorrectly recorded P11D's totalling £3000 per form and unpaid National Insurance Contributions and income tax also running into £1000's per vehicle, taskforces are recovering easy money - and they are getting good at it! with £24.3m recovered in 2011-12, the £109m recovered in the first 6 months of this financial year speaks volumes.

Frank Ystenes, CEO of ABAX UK explained "ABAX has always cited the importance of clear and transparent reporting of vehicle usage. We know full well that reducing the private usage of a fleet saves fuel and reduces maintenance costs, but we were the first company to highlight the need to protect yourself against the HMRC taskforces."

"With the burden of proof sitting with the business, not HMRC, to demonstrate that vehicles are being used in accordance with the tax regulations, it is vital to have control. One business records check can result in a 6 year audit. That audit has the potential to put successful SME's out of business and people behind bars. Not bad people - but people who didn't understand."

It is highly recommended that you read the recent articles in the Sunday Telegraph on this topic. Once the mainstream media latch onto such a topic, the topic is generally catapulted forward into the public domain. Do not get left behind. ABAX have been helping businesses in the UK protect themselves since 2012. Take note now, HMRC are serious and they are coming...

/ Chris Miller