HELP! Under Investigation from HMRC

Chris_Peters70

chrismac1 wrote: »

This is the pitfall of DIY tax returns, you are much more likely to get an enquiry which is not going to end happily. A few points:

1. Most CIS sub-contractors can claim mileage frome their "place of operations" to their sites. The place of operations can often be their homes.

2. HMRC are not entitled to view your personal bank accounts unless you are using them for business purposes.

3. As in previous reply, the mere lack of an invoice is not really a problem if there is other evidence that business expenditure was incurred.

Your accountants should know all of the above, plus other tricks of the trade to get you through with the minimum tax and penalty hit. Clearly use of own home is way OTT and may have been the trigger for the enquiry - by definition, you cannot BOTH be working many hours from home and doing lots of travel to customers it is one or the other.

Thanks for the advice Chrismac,

1. How would I validate my home as a "place of operations"?

2. Unfortunately my business income/expenditure is intertwined with my private transactions all within the same account so I basically have to provide it all which obviously gives them more opportunity to probe other areas, not that there should be further problems.

3. Whilst all of my travel expenditure is recorded by way of petrol/train purchases on my bank statement, most of my tools are purchased at car boot sales in cash, or from Gumtree. This is very common within our industry when buying used tools.

Appreciate your views.

Chris_Peters70

PlutoinCapricorn wrote: »

Have you got any colleagues whose figures you could look at? If they are all buying tools regularly, for similar amounts to yours for example, this would make your amounts more acceptable. How much do they claim for the work they do at home?

Unfortunately not!

Chris_Peters70

densol wrote: »

Just a thought Chris - if its the ' short form ' expenses are lumped together at box 20 - so not necessarily a flag ? Op did u complete short form pages or full pages ?

I used the detailed expenses

SeduLOUs

Honesty is the best policy.

You're probably going to have a nice big tax bill to pay, but if you're honest, open and co-operative with them and show how silly you've been then the consequences will be much less severe than for someone who has deliberately and maliciously evaded tax or continues to attempt to conceal the wrongdoing.

This link may be useful: https://www.gov.uk/penalties-an-overview-for-agents-and-advisers

Good luck.

keaton

Op, do you have cash set aside to pay such a tax bill?

Chris_Peters70

keaton wrote: »

Op, do you have cash set aside to pay such a tax bill?

Actual cash no. I do have 2 low valued BTL properties though.

tomtontom

Chris_Peters70 wrote: »

Actual cash no. I do have 2 low valued BTL properties though.

And you have been declaring your income from these correctly?

Chris_Peters70

tomtontom wrote: »

And you have been declaring your income from these correctly?

I only completed on both of these 6 months ago so they haven't been delcared yet. Obviously I would declare income/expenses on these, you'd be stupid not to, HMRC have the details of the purchases that are sent by the conveyancers.

tomtontom

Chris_Peters70 wrote: »

I only completed on both of these 6 months ago so they haven't been delcared yet. Obviously I would declare income/expenses on these, you'd be stupid not to, HMRC have the details of the purchases that are sent by the conveyancers.

That would apply to all self employment activities

This is going to be a stressful time for you, and I wish you well. It is too late to look at minimising your liability now, you just need to be completely honest with the investigator.

Chris_Peters70

tomtontom wrote: »

That would apply to all self employment activities

This is going to be a stressful time for you, and I wish you well. It is too late to look at minimising your liability now, you just need to be completely honest with the investigator.

Of course it is not too late to minimise my liability. The whole purpose I have started this thread is too gain some insight which up to now, I have. Being honest and employing the use of a good accountant are two measures that are going to reduce my liabilities, or so it would appear.