HMRC have announced that a new taskforce has been launched in south Wales and the south west of England to tackle tax evasion and fraud on property taxes.
Taskforces bring together various HMRC compliance and enforcement teams for intensive bursts of activity targeted at specific sectors and locations where there is evidence of high risk of tax evasion and fraud. Now, the south west and south Wales have been identified as areas where a potential £5 million of unpaid taxes could be uncovered.
Using evidence from the Valuation Office Agency, the taskforce will target anyone who has sold one or more properties and hasn't paid Capital Gains Tax or disclosed any rental income.
HMRC’s Jennie Granger, Director General of Enforcement and Compliance, said:
“HMRC taskforces are deployed in sectors and areas where we've detected a high risk of tax evasion. For example, in a previous property taskforce in London in 2013 we uncovered a barrister who had evaded £471,512 in unreturned capital gains.
“The people being targeted by our taskforces have no intention of playing by the rules and could end up facing a heavy fine or even a criminal conviction.
“A Hertfordshire property consultant who failed to declare or pay Capital Gains Tax and rental income on a number of properties was uncovered by an HMRC taskforce in 2013 and, as well as paying the tax and interest due, now has a criminal record.
“If you haven’t declared all your income, we will find you and investigate.”
It is expected that a further 30 taskforces will be launched in 2014-15 as the Government seeks to raise an additional £7 billion for the year from tax avoidance and fraud.
Burges Salmon comment: this is one of many initiatives which HMRC is taking to counter tax-avoidance and evasion. Similar property campaigns elsewhere in the country have uncovered significant under-reporting of tax and raised substantial sums for HMRC. So this campaign in South Wales and the South West should come as no surprise. HMRC has invested heavily in new computer systems which make connections between a range of different government data sources which they are deploying to good effect.
However, the new systems can be blunt instruments and there may be a variety of reasons why the information is misleading, incomplete or plainly wrong.
The other important point is that much under-reporting is inadvertent: people have just made mistakes or misunderstood their obligations. HMRC's heavy-handed letters may sometimes give you the opposite impression, but making a mistake is not a crime - so long as you put it right as soon as you're aware of it.
If you do get an enquiry or other correspondence from HMRC the most important thing is not to panic, but to take early advice.