In this modern age, the volume of financial transactions done over the internet is ever increasing. HM Revenue & Customs (HMRC) have invested heavily in keeping up with technology – and the results are speaking for themselves. More and more investigations are being triggered and worked on the back of HMRC’s increasing use of technology, including the use of apps.
What information is being tracked by technology?
Businesses may be unaware that everything being sold over the internet is capable of being tracked. HMRC have been able to obtain detailed records of even those who order food through an App such as Deliveroo, Just Eat etc.. As a result, the family takeaway is being recorded and used to check all sales are being fully disclosed.
Property transactions are being cross referenced by the use of CONNECT with Land Registry records to determine both ownership and the purchase price. The first question HMRC may ask is how the purchase was funded. HMRC have been running the Let Property Campaign since August 2013 in order that landlords can correct their past tax compliance. The Let Property Campaign is probably the longest running campaign ever run by HMRC.
Incorrect claims for Private Residency Relief (formerly Principal Private Residence relief) making property gains tax free are being identified b HMRC and challenged. A invalid claim for Private Residency Relief can where more than property is being claimed per individual taxpayer at the same time and the property was not actually ever occupied by the taxpayer.
What should taxpayers do?
The information is out there so doing nothing nothing is not really an option.
The Common Reporting Standard (CRS) is now in its second year of operation. CRS is proving to be a reliable source of data particularly in relation to overseas rental property but where the income is being passed back or accrued for the ultimate benefit of UK taxpayers.
Consequently anyone uncertain or knowing that they have matters to disclose are urged to seek specialist advice. The penalties in relation to income or gains from an offshore source are now at their highest level ever. Taxpayers now fall under Failure to Correct regime which came into effect from 1 October 2018.
Is it just taxpayers that are involved?
Penalties can now be applied to professional advisers as well. Professional advisers can be found to have assisted in the movement of such funds to other tax jurisdictions in an attempt to try and keep one step ahead of HMRC.
Anyone seeking specialist advice can contact me at email@example.com or Andy and firstname.lastname@example.org for an initial free consultation.