Help with tax evasion investigation.

Pennywise

firefox1956 wrote: »

If they have Legal Expenses cover on their Home Insurance would this help them ????

As tax evasion is a criminal offence, I doubt that any form of legal or tax investigation insurance will cover this. They usually only cover mistakes, random enquiries, etc. Most have a disclaimer clause when the tax enquiry is caused by deliberate evasion which seems to be the case here.

bluelass

im told by my friend that the letter they received from the inland revenue states they estimate from what they have been told a additional income between £35 to £45 thousand pounds would have likely to have been earned during the last 18 months.

redpete

bluelass wrote: »

im told by my friend that the letter they received from the inland revenue states they estimate from what they have been told a additional income between £35 to £45 thousand pounds would have likely to have been earned during the last 18 months.

Well if that's true it's a bit more than the odd bit of moonlighting. Is their estimate close to reality?
No matter how lovely your friend is this is a large amount of money to 'forget' to pay tax on.

Spidernick

It will be nowhere near to reality and those estimates are put in to create a reaction.

It's what they used to do in the old days before Self Assessment where people didn't file accounts: they'd put in a really high estimate, which the individual would then appeal and the Inspector would then refer it to the Commissioners, thus forcing the individual to file their accounts rather than be lumbered with an excessive tax bill.

James_B.

bluelass wrote: »

im told by my friend that the letter they received from the inland revenue states they estimate from what they have been told a additional income between £35 to £45 thousand pounds would have likely to have been earned during the last 18 months.

And yet you still think that it is wrong that someone would mention it?

purdyoaten

It seems very odd to me that HMRC would give any indication of the amount of additional income involved in a letter - I have never experienced this. HMRC generally do not 'show their hand' at this stage of an investigation.

So, what type of letter was it? Was it a determination letter (bit early for that, I would think).

HMRC used to issue what were known as 'protective assessments' in the days gone past, as spiderknick has indicated- not sure whether that practice still exists.

Either way, my advice would be to engage a tax specialist as others have said and have them contact HMRC BEFORE the latter decide to up the ante. To use a football analogy, it is better to equalise before the other team scores!

bluelass

chrismac1 wrote: »

He's not exactly Al Capone, is he? He needs to co-operate fully and make a full disclosure of what income he's had, making sure to also disclose all allowable business expenses. Most part-time DJ's buy a lot of kit so it is even conceivable that he's made losses in some tax years and can get a tax rebate.

Whilst there probably will be fines, full co-operation on his part means they will be at the lower end of the scale. He should consider getting representation from someone who knows how to deal with HMRC.

chrismac1 where did you get the he from? How do you know the gender of the person I refer to?;)

bluelass

James_B. wrote: »

And yet you still think that it is wrong that someone would mention it?

its wrong that someone has well and truly over estimated the earnings to the tax people. Do you honestly think being a casual DJ and first aider at events could earn this much in 18 months? if so I will pack my job in and do it I would be quids in!:T

purdyoaten

bluelass wrote: »

its wrong that someone has well and truly over estimated the earnings to the tax people. Do you honestly think being a casual DJ and first aider at events could earn this much in 18 months? if so I will pack my job in and do it I would be quids in!:T

Of course it is not correct! Either way advice has been provided by the likes of pennywise, chrismac and myself as to what should be done and I judge that they have had at least as many years of experience as I have of dealing with exactly this kind of area.

The inspector has received an anonymous note/telephone call. The inspector has to meet invesigation targets and this is a 'free go'. He/she will not be going anywhere.

The one thing that your friend does not want is to have HMRC issue a determination (of tax). If it gets to that it will matter not a jot what the accounts show as the tax on the determination will remain payable.

Pennywise

Is it even genuine? I've been an accountant over 30 years and never seen an initial enquiry opening letter that says the amount of undeclared income and tax. It's very strange, so strange that I don't really believe it has come from HMRC. Are you sure someone hasn't been creative with a scanner and word and made up a letter to scare them into dropping themselves in it by replying to HMRC? Even so, they should come clean anyway but with proper help/support from a professional who knows how to deal with tax investigations.