HMRC compliance check - personal bank statements

Rcaff wrote: »

I have never had any other income so why do they suddenly think I do and how do I prove otherwise ?

It is quite difficult to prove a negative. So, giving them your bank statements and saying, "take a look, nothing to see here" would be a standard approach to help prove it.

You suggest they look at your PAYE record, which shows you paid some tax on earnings as an employee. They already have that data and it simply tells them you had earnings from employment and paid tax on them, so is not very interesting.

What would be more interesting to them is to find out whether, after having a bright idea to incorporate a company and set up a business in 2012, you changed your mind and decided to run the business instead on an unincorporated (sole trader) basis, running the trade through your normal personal bank accounts for the last five years and getting very rich without declaring any of the income, winding up the dormant company after a year or so once you decided you were happy with the unincorporated route. One way to help prove you didn't would be to say hey, here's my bank statements for five years, you can see there are no large mystery receipts or outrageous lifestyle spending. Showing the bank statements to be just normal ongoing household expenditure would put their mind at ease.

Or for that matter, just for the heck of it, how do they know you didn't sell the dormant company for £50k, or close it down for cash so that someone else could use the name or one very similar to it. Or agree to wind it up in exchange for half a million pounds after one of the competitors in your industry made you an offer you couldn't refuse not to proceed with your venture and take a big market share from him. Again, showing the bank statements to be just normal ongoing household activities would be useful 'lack of evidence' that your business ever amounted to anything

I am only reluctanct to send in the statements because I dont see why they should see what we are spending and on what. This smacks of big brother to me:mad:

I guess there are others who might feel the same too, in your shoes. But on the other hand, do you really think the compliance officer at HMRC is going to be going back to his family this weekend and saying

..."'ooooh, you'll never guess what, I saw this one couple's bank statement this week and do you know what they spent as their average order at Pizza Hut over five years? I had my assistant add it all up, it was £700. £700 can you believe that. Most commonly, £16.99 a time. That's the price of a Veggie Supreme with a garlic bread isn't it, I've seen on the telly. So first I thought they are vegetarian but then one time three years ago they had what looked like a big order from Land of Leather, bit hypocritcal isn't it. But then I thought if they do have animal products but order something that looks like the price of a veggie pizza every few weeks, maybe they just don't like Pepperoni Feast or those Ham and pineapple ones. That's it, no pork, must be they're Muslim. And one summer they had a hotel charge from Egypt - Cairo it was, and that's an islamic country isn't it, so maybe they're muslims. And I said to my assistant Brenda, I said Brenda, ooh could they be an Islamist terrorist sleeper cell, that would be exciting?! But then we found last June they bought a new car, and you wouldn't buy a car in Ramadan as you'd be too hungry all day to enjoy it properly. So they're probably not Muslim, but with the no pork thing its probably they're jewish...

Anyway we couldn't find any signs of her running a business through the personal bank accounts but I'm going to see if I can visit her at home, as they have an expensive Sky subscription so husband probably watches the sport all the time so maybe she feels like she needs more attention and whether they're jewish or muslim the husband's probably circumcised so perhaps she'd be up for sampling my uncut member, shall I see if I can get her round to our swingers club this weekend?"

The reality is though, that the HMRC auditor couldn't care less about the tedious details that your bank statements might reveal about you, they are just looking to do some standard compliance checks. If they never audited anybody, loads of people would under-report tax. So, giving up your bank statements for a sample audit is just you doing your duty to play the game and keep the country running, like doing jury service once in a blue moon or whatever. Certainly doesn't seem worth going to court to fight it, unless you want to burn some taxpayers money when HMRC has to come to court, and you reaaally have nothing better to do with your time and want to arouse suspicion about what's hidden in your bank statements that shouldn't be.