If HMRC agrees, this will means that you no longer have to file a return. You can ask for a return to be withdrawn even after late filing penalties have been charged. If HMRC agrees, you will not need to file the return and any penalties issued for missing the tax return filing deadline will be cancelled. You will usually have only two years from the end of the tax year for which the return is due, in which to ask for a return to be withdrawn. If there are exceptional factors, you are on low income, and you need tax returns to be withdrawn for a number of years, ask TaxAid for advice.
HMRC will not normally withdraw a return if you have been self-employed at any time during the tax year — even if it was only for a short time and there is no tax owing. HMRC will then send you a notice to file a tax return, either by post or electronically. Tax inspectors also now operate undercover, in disguise, and in teams to root out suspicious behaviour. Examples include inspectors acting as customers needing hair cuts to gain an understanding of how a salon operates. Other inspectors pose as couples out for a meal at a restaurant.
Gary Ashford, head of tax disputes at RSM Tenon, the accountants, says restaurants are a happy hunting ground because of the large number of small value cash transactions that are involved and regular changes of ownership. Restaurant owners are also supposed to apply income tax and national insurance to tips, but when tips are paid in cash, waiting staff often pocket them while the proprietor turns a blind eye.
If they have seen go in, but the books only account for , they could have a case for fraud against the business. For all the weapons in its technological armoury, tip-offs are still a vital source of information and tend to generate the biggest returns.
If they were anonymous we tended to throw them away. Today, the Revenue keeps this information on file and uses it to cross reference to other information about that individual. Rewards vary from a few hundreds to tens of thousands of pounds, but are paid only once tax has been recovered — and payments are not a fixed percentage of the tax recouped.
In many real-life sources of data the number one occurs as the first digit about 30 per cent of the time, while larger numbers occur less frequently. Unaware of this finding, fraudsters are likely to choose numbers that do not fit this pattern. In it homed in on the medical profession, acquiring information from National Health Service trusts, private hospitals and medical insurance companies to test its suspicions that practitioners were failing to declare fees for consultations, medical examinations and other services.
This trawl resulted in five arrests. Or if someone owned three properties in their name but had not declared any rental income, that would also be a warning sign. In certain circumstances, inspectors now have the power to raid the homes of people they suspect of not paying tax. They did this times in the tax year , according to Pinsent Masons, the international law firm.
That was a per cent increase on the previous year. Information can come from a variety of sources: on-line search, door to door enquiries, reports from members of the public or from relatives, information from other government departments, investigations into other businesses, among others.
HMRC uses very sophisticated software called Connect. This analyses large volumes of information, detecting patterns, connections and inconsistencies to flag up possible tax evasion. HMRC also has extensive information gathering powers to access information on such things as debit and credit card sales and details of on-line selling. The situation is very serious, but you will generally benefit from disclosing the position to HM Revenue and Customs as soon as possible because:.
It may also help to know that HM Revenue and Customs will often try to reach an agreement with you regarding your outstanding tax that reflects your ability to pay.
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