We are going to spend some time now with a phenomenon that seems to be back in big numbers. It is one of the other main problems running across my desk this month. Did you know there are still huge amounts of professional drivers still not registered with the HMRC?
I thought we had put an end to this with the onset of licensing twenty years ago, but it seems our new gig economy ways have brought this back into the fold.
To be fair, there are many possibilities as to why this has happened…
- Someone supplementing their income (which of course should still be declared) who then loses his/her job or decides to go full time driving.
- Redundancy or minor health issues, all of these take away from looking at the potential tax consequences.
- Many people ‘test the water’ intending to register when they start to make some money, but somehow never find the right time to make the transition.
- Others have not had the money to pay their tax and thought that it was best to ‘keep quiet’.
By the time the driver wants to ‘come clean’ there may be a great deal of anxiety – a desire to come into the system; but a fear of doing so.
So how can someone make this happen?
Its always best to report to HM Revenue and Customs as soon as possible, HOWEVER it is usually a good idea to get your house in order first. After reviewing the situation, an accountant will be able to tell you how much tax is owed. Even if someone does not have adequate books and records, they can always be forensically rewritten, using comparable evidence.
Once done, we then report. Once again, most good accountants will do it for you. Sometimes we sit with a client on the end of the helpdesk phoneline and talk them through it. However, it is normally given in writing, as it gives us the chance to present the case in full; hopefully warts and all, including any personal reasons why the income was failed to be declared. It includes accounts or summaries of income and expenditure which indicate the level of income involved. This should help to ensure that HMRC responds in the best way possible.
Accountants, by the way, must act quickly in all these cases. This is, due to anti-money laundering rules, which mean if not done properly we now get to be the baby flushed out with the bath water. Most accountants should work for a set price, advise and prepare the case for disclosure. And, be able to check the level of tax arrears. They should also adequately advise on the HMRC’s likely approach in the case and make the full and complete disclosure.
People can also be caught out for not disclosing…Renting out property, the sale of property i.e. Capital gains, or from selling shares or online trading. (even boot sales) if they are in the mood to dig.
Approaching the Taxman after being a ‘ghost’ for many years, is a scary thing, and for those that have not registered for three/five/ten/twenty years it seems scarier and scarier, especially when you realise that even if they weren’t earning enough to have a big tax bill, the costs in fines alone would be huge. I say of course…better get an accountant to do it for you! However, in general it is better to approach The HMRC than waiting for them to seek out the non-registrant. Also, each individual officer has a certain amount of latitude with fines depending on how much help and or truth is being thrown at them.
Next month, we will be talking about the rise in inspections, (section 9a) enquiries and investigations, and what we can do to prevent and or deal with them. The Taxman wants his money and with better IT and investigative tools he won’t be denied.
Or will he?