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Tax evasion: how you might be caught

It has been estimated that tax avoidance costs the UK economy around £69.9 billion a year. It's no surprise then that the government have been attempting to crack down on tax evaders. Anyone caught avoiding tax can expect to face heavy financial penalties or even a lengthy prison sentence.

Tax can be complex subject to understand and HM Revenue and Customs understand this. They may choose not penalise someone who has underpaid tax if they are convinced that it was an honest mistake, but they are not lenient with people who they suspect have intentionally avoided tax.

From 1 April 2012, new legislation was implemented that strengthened the powers of HMRC to investigate and tackle tax fraud. They can also publish names and companies that are penalised for deliberately evading over £25,000 worth of tax.

Tax evasion: how you might be caught

As well as this deterrent, HMRC use the following tactics to find tax evaders:

  • They encourage members of the public to anonymously report tax evasion
  • They use internet bots to gather evidence and information on companies and sole traders. One major element of this method has been identifying sellers on eBay who aren't paying tax on their earnings
  • They regularly check National Insurance files to detect any suspicious activity
  • They can request information from your bank about undeclared earnings or income streams
  • Special task forces can identify and interview suspected tax evaders in person

HMRC want to make it as easy as possible for people to understand and pay their tax bills. Visit hmrc.gov.uk for more information and advice.

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