The Government recognises that the majority of UK taxpayers, individuals and businesses, pay their fair share towards the provision of public services. Where taxpayers try to hide their obligations, HMRC now has a more comprehensive view of finances and is committed to dealing with any non-compliance. So, what information does HMRC know about you and your business?
HMRC connects data sources
HMRC can now check the information which taxpayers provide on their tax returns against a vast amount of Government data held in its Connect computer system or requested from companies or countries overseas. It makes it far simpler to identify differences between stated earnings and lifestyle, or profits and company spending on buildings and vehicles, for example.
HMRC has access to a vast amount of information, and whilst it doesn’t specify its sources, it has been reported to include:
- Bank records in the UK and over 60 countries internationally
- UK tax records including council tax paid, VAT details, previous tax returns and information on any past tax investigations
- Public social media account information for example on Facebook, Twitter and Instagram which provide a window on an individual’s lifestyle
- Land Registry records of purchases and sales
- Web browsing and email records
- Visa and MasterCard information on transactions
- DVLA information about vehicle ownership and purchases
- Income received including company benefits, child benefit and maintenance payments
- Online trading income including eBay, Gumtree and Airbnb
From safe havens towards shared financial information
As well as having a better overview of finances from these sources, HMRC benefits from overseas data. In 2018, information about the offshore financial interests of almost 3 million UK taxpayers was received by HMRC as part of a new automatic information exchange agreed amongst the G20 countries. In addition, the UK along with the OECD is working to eliminate safe havens and ensure transparency around the tax paid by multinationals. Tax treaties also enable the UK to request and exchange information with 125 tax jurisdictions around the world. This shared information makes it easier for HMRC to know if everything is in order or if further investigation is required.
Making Tax Digital to streamline VAT calculations
The biggest corporations and wealthiest people can expect the highest level of scrutiny from HMRC. With small and medium-sized businesses, the focus is on data and digital tools to help them get their tax right since the biggest reason for non-payment, across all types of taxpayers, is errors in calculations. HMRC and the Treasury describe this situation as “failure to take reasonable care”. The current digital initiative, Making Tax Digital for VAT, is designed to help businesses get their reporting correct first time since it will eliminate errors caused by transferring data from paper, spreadsheets or other records to HMRC’s online portal.
Need support with tax compliance or tax planning?
A professional accountancy practice such as HB Accountants can ensure that you are compliant with the law and minimise your tax obligations through our expert understanding of the latest rules, such as the tax breaks you are due. You’ll also avoid penalties with timely, compliant tax returns.
We cover: Income Tax; Personal, Partnership and Trust Tax Returns; Corporation Tax; Capital Gains Tax; VAT; Inheritance Tax; Tax-efficient Remuneration; Tax Investigations and Trusts.
To get your tax affairs in order contact the team at HB Accountants. You can email directors@hbaccountants.co.uk or call us on 01992 444466.
