Tax inspectors will be allowed to come to your front door under new powers to come into force next year. Posed by model
Posted on 03/14/2008 12:10:19 AM PDT by Stoat
Tax inspectors will be allowed to come to your front door under new powers to come into force next year. Posed by model
Inspectors will be allowed to make lightning visits to taxpayers' homes, under powers due to come into force next year.
Under the extraordinary new rules, they will be able to turn up unannounced and demand to see tax records.
They will not just target big business but could hit any taxpayer if they suspect money is owed, whatever the amount.
"No tax evader should get away with it," one accountant said.
"But you don't want a knock on the door at 4am if you are a good, upstanding taxpayer, do you?"
Evidence emerged yesterday of the staggering tax dodging which is rife in Britain.
Documents, released by Revenue and Customs while all eyes were on the Budget, reveal up to £41billion is lost.
This translates to a cost of more than £1,600 each to every household in Britain.
Tax bosses did not want to release the controversial figures, but were forced to publish them on their website under the Freedom of Information Act.
The 52-page document shows it estimates between £10billion and £41billion was lost through tax avoidance (the legal practice of using loopholes in tax legislation) and evasion (illegally avoiding paying tax) between 2000 and 2005.
This is known as the "tax gap" - the difference between the amount of tax owed and the amount of tax paid.
It only relates to "direct taxes", such as income tax, national insurance, stamp duty, capital gains tax and corporation tax.
Yesterday, Revenue and Customs insisted it had only been reluctant to publish the information because it was "unreliable" and "highly problematic due to lack of data".
The analysis, done in 2005, suggests up to £23.4billion alone was lost on income tax, capital gains tax and national insurance.
The publication of the document was sensitive because it is believed to be the first- ever official analysis of the "tax gap".
The gap - a figure which is impossible to pin down - is one reason why Revenue and Customs wants stronger powers to inspect tax records.
Tax chiefs have been pushing for the new rules since the Inland Revenue merged with Customs & Excise in 2005.
After a long consultation, the new rules will come into force on 1 April next year.
Armed with their new powers, tax inspectors will be able to make "unannounced" visits to a person's home if they are suspected of failing to pay all their taxes.
The new laws are aimed at "business premises" only, but inspectors will be able to raid a private home if it is used for "business purposes".
This includes millions of the self- employed and small traders whose business is registered at their home address.
At present, a tax inspector has to provide strong evidence of criminal activity and persuade a judge or magistrate to issue a search warrant.
But, under the new rules, they will not need a search warrant - or any evidence of criminal activity.
They will require only the permission of a senior Revenue and Customs officer - and a suspicion that there is an unpaid tax liability.
The taxpayer can refuse to let the tax inspector enter his office, or home, but could face a stiff penalty for doing so.
John Whiting, a tax partner at the accountants Pricewaterhouse Coopers, said it is vital for safeguards to be put in place to protect innocent taxpayers.
"They must do everything they can do tackle fraudsters, but they must balance that with not hassling innocent people who are just trying to do their jobs and pay their taxes," he said.
Revenue and Customs insists the majority of visits will be prearranged with the taxpayer.
If successful, the new powers will raise even more money from British taxpayers, already forking out record sums.
During the current tax year, they are expected to pay nearly £250billion in income tax and national insurance, equal to £7,790 per taxpayer.
Gary Ashford, director of tax investigations at the accountants Grant Thornton, stressed the need for safeguards.
"They must make sure that it is not some bully boy tax inspector turning up alone on people's doorsteps."
And the gravediggers' dance cards would be full....
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