Inland revenue (IR) interest in stoozing?

schiff

I confess that I am astonished. Things have obviously moved on since I was in situ - 12 years ago. To my mind this is really Big Brother 1984 stuff. In my day we behaved in a much more gentlemanly fashion!

So I am probably not a suitable person to carry on with my own input into this, though I am trying to verify that all this is possible - and done - via an ex colleague and friend who is still plying his trade in the IR.

I am still confident though that you have nothing to fear from your stoozing activity nor from the mortgage switching. But I hope for your sakes that your return showed everything it should and that you have kept all the documents relating to all this.

The thing I really don't like about this is the invasion of privacy that comes with it. It's fair enough asking to see dividend vouchers, annual statements of interest and tax deducted and other formal documents - but for the IR to see your credit card statements means your whole lifestyle is exposed for them to delve into. And that's not fair.

I'll post again when I have something to add. Be interesting to have Bordera's comments and xbigman's - it sounds as if they are more up to speed than I am. And I might be due to apologise to xwraith!

Angie8

Don't think there is anything to worry about - you've done nothing illegal here. It's a bit cheeky of the IR to ask for your credit card statements though.

The sad fact is, if you were doing something illegal like drug dealing, the IR probably wouldn't bother you.

Bowser_3

Not any more! The Proceeds of Crime Act is in effect and drug dealers are being stripped of their assets as quickly as the police & crown office can get them.

http://www.opsi.gov.uk/acts/acts2002/20020029.htm

schiff

What I would like to be asked here is for the grounds on which the IR feels entitled to ask for these extra things. I feel sure they have to have a case for doing so, eg. a definite fault with the return. My gut feeling is that the IR have overstepped their powers but of course without knowing everything it is hard to be certain. And, as said before, I'm a bit out of touch with current IR methods.

The problem with putting this question is that it is immediately seen as defensive and suggesting that there MIGHT be something to hide. Rubbing them up the wrong way in the process. An accountant would be able to ask without the IR coming to the wrong conclusions and I wonder if the SSs have an accountant or would be prepared to engage one - just for this matter. It will cost but it could alleviate the worry and bring expertise into the equation.

Are you around Bordera - to comment?

schiff

Just had another thought! This 'case' has become a bit of a obsession!

Mrs SS says Mr SS is liable at 40% but it is deducted at source. Which suggests he is employed and pays tax under PAYE.

A £75,000 pot of stooze money could produce almost £3800 of interest (gross) pa, but the interest would only have had tax at 20% deducted from it at source. The additional tax due (which will be at 18% - higher rate 40% less basic rate 22%) can only be collected separately, unless it is taken care of by an adjustment to the PAYE code (which is pretty rare). So the potential extra tax is almost £700.

If the interest has been fully and correctly entered on the return form (and doesn't disagree with the IR's info from the banks etc), you would normally expect them to just make an assessment to charge the additional tax and you just pay it. End of story.

UNLESS of course the IR is sufficiently mystified by the sudden appearance of a large sum of interest, where there has been little or none before. But I would have expected question one to be: 'Would you pse account for the source of the capital giving rise to the large figure of interest received in the year, which is not in line with previous returns.'
I would not have expected the request to be the big hit of bank, building society, credit card and mortgage statements. That, I would have thought, would come if and AFTER your reply to question one had been found unsatisfactory.

Can't help feeling there is a lot more to this.

ceebee_2

I would suggest that you are one of the few, who has been picked at random for an audit.

A thought which has crossed my mind, but didn't dare suggest it previously, concerns the position that the Revenue could take with respect to 'stoozing'. If money has been 'borrowed' at the un-commercial rate of 0%, they could claim that, as a commercial rate would be, say, 10%, a benefit has been derived which should be declared.
Just a thought !!!!!!!!!!!

schiff

ceebee - yes, but the alleged benefit would have to stem from something taxable ie. an employment. I doubt it would stick if it was something any TDorH can do.

smartsaver

schiff wrote:

Can't help feeling there is a lot more to this.

We are normal PAYE employed and have our savings taxed at source. We are doing OK but dont earn mega bucks and have know idea why they picked on us.

We are happy to give any details they want but don't see why we should employ an accountant. Theres really nothing we can't 'account' for.

schiff

To me that sounds just fine. You seem confident of your position - as I think we have all hoped for you since the beginning! - and I'm sure you will be OK.

Best of luck!

Paul_Herring

schiff wrote:

A £75,000 pot of stooze money could produce almost £3800 of interest (gross) pa, but the interest would only have had tax at 20% deducted from it at source. The additional tax due (which will be at 18% - higher rate 40% less basic rate 22%) can only be collected separately, unless it is taken care of by an adjustment to the PAYE code (which is pretty rare). So the potential extra tax is almost £700.

May I suggest it is (now) not that rare? I've just had my P2 (notice of PAYE coding for those who don't know) for next year, and "interest on savings" is a deduction that they've added amongst all the other things making up my code. The fact I submitted a non-trivial amount of interest on last year's self assessment may have had something to do with this.