HM Revenue & Customs Task Forces

When the Task Forces initiative set sail in May earlier this year, HM Revenue & Customs (HMRC) set its sights on businesses deemed to have deliberately evaded tax.

HMRC announced that the 12 Task Forces for 2011/12 would be geographically specific and involved in ‘intensive bursts of compliance activity into specific high risk trade sectors’.  A clear distinction was also drawn between the multi-disciplined, enforcement driven Task Force teams as compared to the disclosure based nature of ongoing campaign activity.

High risk trade sectors

The first three Task Forces descended on restaurants across London, Scotland and the North West in May and June.

531 restaurants are now under investigation as a result of this activity.  Unpaid tax of £634,050 has been identified in 45 of the cases and 22 business owners currently face prosecution.  Two restaurateurs from Edinburgh were detained on 5 December, interviewed and then released as part of the ongoing Task Force operation across Scotland.

Six further Task Forces have been announced over the last few weeks.  The next Task Forces will pursue:

• Scrap metal dealers in Scotland who deliberately suppressing their income or inflating expenditure to evade tax.
• Construction traders in the North West and North Wales who are self-employed or run their own company and who suppress sales or over claim expenses.
• Taxpayers in the South East who are filing to submit their statutory returns across Corporation Tax, Income Tax Self-Assessment, PAYE and VAT.
• Fast food outlets in Scotland which are deliberately falsifying their records and under declaring their true sales.
• Landlords in the North West and North Wales who own and rent three or more properties.
• Commercial companies across Greater London which have deliberately failed to comply with the ‘Option to Tax’ regime.

What is happening?

Invariably the restaurants and fast food outlets are being visited at closing time, when the HMRC officers will typically request sight of the business records, ask the business owner to cash up and seek the names, addresses and national insurance numbers of all the employees on site.

It has not been uncommon for HMRC to make unannounced visits with Police Officers and UK Border Agency (UKBA) Enforcement Officers (under separate warrants).  Whilst the HMRC Officers focus on the accounts records, the UKBA Officers interview the staff on site to see if any of them are illegal workers.  If illegal workers are found, the UKBA Officers can charge a maximum penalty on an employer of £10,000 per illegal worker. If it is determined that illegal workers have knowingly been employed, the business owner can be liable to criminal prosecution.

If you would like to discuss this matter, please contact your usual Johnston Carmichael contact or a member of our team listed below.

Inverurie

Don Gordon, Director, Tax Investigations. 01467 621475. don.gordon@jcca.co.uk.

Edinburgh

Wendy Ramsay, Client Relationship Manager. 0131 220 2203. wendy.ramsay@jcca.co.uk.
George Mason, Tax Manager. 0131 220 2203.  george.mason@jcca.co.uk.