Image via WikipediaPart of my work as a tax practitioner is to represent those who for one reason or another have not declared their income properly. Sometimes they have not declared their capital gains either. Sooner or later they need help from someone like me.
There are all sorts of reasons why people find themselves outside the tax system. I have certainly heard some tales. I can however see certain trends in the way my new clients might have fallen outside the system.
Some individuals do start out in innocence in that they may start a very small business for “pin money” which would be well below the level of income tax or National Insurance. Their business might then take off, they think they ought to have told HM Revenue & Customs before, and they become afraid to do so for fear of retribution. Thus they go on outside the system for several years. At some point they are either caught by HMRC or (as I much prefer) they approach me for help because they simply want to come clean and meet their obligations to the Exchequer. I love people with a real conscience!
Strangely there are some who really never dream that they could possible be liable to tax. These are more commonly those who receive some sort of investment income upon which they “assume”, if they had thought about it at all, that the tax is already paid. Other people in this category may include those in receipt of rents on their property. Yes, there really are some extremely naïve types who have no idea that the Government might want its share of their income.
The not so innocent
This category really knows that they should be paying tax. They just like to live on the edge and take the risk of being caught, but somehow they do not expect to be. They may have earnings or have let property.
The net tightens
It is a popular belief amongst both the public and some accountancy and tax professionals that HMRC does not have the resources to catch tax evaders, and especially small time ones. They think that HMRC prefers to concentrate on the big fish amongst the dodgers by going after the miscreants who have substantial funds in Swiss bank accounts. They believe that the Liechtenstein Disclosure Facility represents the main type of evasion mainly being targeted.
HMRC have other strings to their bow. For example they have been checking the Land Registry and have been finding not only undeclared capital gains realised by property investors, but also significant undeclared rents from such properties. Judging from instructions I have received from new clients who have been found out, this is a very successful initiative.
All are welcome
Helping new clients who want to come out of the woodwork and into the system is very pleasing, and I am happy to assist those who have been nabbed by HMRC too. I don't judge people and in the end they all need help.
The variety of work is hugely satisfying, and once we have established that there is absolutely nothing else which has been forgotten in the way of income or gains, I can get a fair deal.
Of course I don't like tax evasion because dodging obligations to the Exchequer is much the same as taking the money out of our own back pockets. For the small timers, though, whether innocent, oblivious or a bit guilty, HMRC mainly wants them in the system rather than bankrupting them or hanging them at Tyburn Tree. In the end it is better to cough up some money and have someone like me represent them, because afterwards there will be no more looking over their shoulders.