Inland revenue (IR) interest in stoozing?

smartsaver · 17 January 2006 at 6:49PM

Mr Smartsaver has just recd a form to complete from the IR. They want to know why large sums of money are being around our bank accounts, details of all our credit card statements for 2004/5 (good job I kept them. They are in for a surprise!) :eek:

They also want to know how we 'paid off' our mortgage (we didn't we changed it to an offset mortgage for the same amount). We do have almost the mortgage total in the offset savings account.

We are not worried because we can expalin everything but are wondering if they have taken an interest in anyone else?

Clariman · 17 January 2006 at 7:26PM

That's the first I have heard of the IR taking an interest, but you can see why they would I suppose. If they see unusual sums of money which look like income and they don't have any records of tax payments, they could question it. As you say, it should be nothing to worry about because it is all legitimate and you have the evidence.

I'm sure many of us would appreciate updates on how this develops (not details, of course, just general info on how they accept the explanation etc).

Clariman

innovate · 17 January 2006 at 7:43PM

How do they know about large sums of money are being around your bank accounts? How do they know what accounts you have, for starters? Do they get all this information from the CRAs? Trust you have checked your CRA records?

As to them requesting details of your 2004/5 credit card statements: as private individuals [as opposed to businesses], do we have a legal obligation to keep them? And to show them to the HMRC?

Minerva_2 · 17 January 2006 at 7:50PM

In my experience, the Banks send the IR details of any interest that you have earned. Unfortunately, in my case, whilst they told the IR, they didn't have the courtesy to send me the same information - result - I under declared the interest that I received.

Thanks HXXXFXX bank!

Minerva

Penny-Pincher!! · 17 January 2006 at 7:54PM

I'm sure the Inland Revenue can gain full access to your bank accounts now

PP
xx

Moglex · 17 January 2006 at 7:56PM

innovate wrote:

How do they know about large sums of money are being around your bank accounts? How do they know what accounts you have, for starters? Do they get all this information from the CRAs? Trust you have checked your CRA records?

Any financial institution is obliged to tell the IR about any interest they pay. So even if you just get a couple of pounds from some crummy 0.01% interest on your current account, the IR will get to hear about it. They can, or course, infer the amounts from the interest rates and the interest amount.

As to them requesting details of your 2004/5 credit card statements: as private individuals [as opposed to businesses], do we have a legal obligation to keep them? And to show them to the HMRC?

No, we do not, but it is extremely unwise to start getting smart with the IR. They have extremely draconian powers and although they are eventuually subject to review by a court, they usually win.

If you don't give them any information they want they will simply make an assessment of the amount they think you might have made (which they will make significantly (think many times) higher than the amount they think you are likely to have made on the evidence available to them), and tax you on that. You can get the amount reduced if you provide them with the information later, but why go to all that trouble?

Milarky · 17 January 2006 at 11:58PM

Moglex wrote:

If you don't give them any information they want they will simply make an assessment of the amount they think you might have made (which they will make significantly (think many times) higher than the amount they think you are likely to have made on the evidence available to them), and tax you on that. You can get the amount reduced if you provide them with the information later, but why go to all that trouble?

If what you are describing is accurate (that the Revenue knowingly inflate estimates) then that makes them the equivalent of 'protection' rackets! I can sort of understand the reasons for giving them sweeping powers - that the state should not run short of money - but it's a slap in the face for manners if they really do behave like that.

The point about tax and stoozing surely is that you just register all your savings accounts for tax and if you are a higher rate taxpayer those interest payments have to be declared for the extra to be taken. There is no real distinction between having savings accounts as an individual and having savings accounts with (free) borrowed money in them is there?

(If you could be charged for carrying out a business doing this I suppose you could claim the 'expenses' of doing so. On 0% cards that would include the balance transfer fee. On Life of balance transfers that could include the interest also, no? i.e. making the activity into a business might make it more profitable yet that could fall foul of the lenders too)

smartsaver · 18 January 2006 at 12:24AM

Milarky wrote:

.

The point about tax and stoozing surely is that you just register all your savings accounts for tax and if you are a higher rate taxpayer those interest payments have to be declared for the extra to be taken. There is no real distinction between having savings accounts as an individual and having savings accounts with (free) borrowed money in them is there?

All out stooze pot used to go into a joint current account then into my savings account cos I pay tax at a lower rate. In effect Mr SM has most of the 'debts'

and I have all of the money

. I wonder if the IR will question why Mr SM had no savings of his own

All stooze pot is now in an offset account and our own savings are in ISA's so can't see a problem I have always paid tax on my savings at source and surely once the money hits a current account you can do what you like with it.

sarahlouise210 · 18 January 2006 at 12:27AM

HMRC do not have general access to bank accounts but are notified of large interest payments or interest payments that have had no tax deducted. Cases are investigated for a number of reasons - if you have completed a tax return and shown conflicting information then expect an investigation! Another major reason for investigating large sums is that there is a possibility that money invested could have been a gift in that tax year and if the person who made that gift was to die within 7 years the gift would need to be included for inheritance tax purposes. If the interest received(no tax deducted) is above the tax free allowance - expect a letter!

smartsaver · 18 January 2006 at 12:32AM

All tax has been paid at source and when I say BIG somes moving around I think the biggest is 18k plus a couple of 15k's and a few 5k's the odd 10k ... :eek: we must look like a right dodgy lot...

YorkshireBoy · 18 January 2006 at 12:39AM

smartsaver wrote:

All tax has been paid at source and when I say BIG somes moving around I think the biggest is 18k plus a couple of 15k's and a few 5k's the odd 10k ... :eek: we must look like a right dodgy lot...

I've posted elsewhere today that I've moved £93K off credit cards and through my current account (and brought £30K of it back again) in the last 9 months alone, but my stoozing activities are fully documented - I never throw anything away!

Inland revenue (IR) interest in stoozing?

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