Hot on the heels of news that the taxman plans to raid the bank accounts of people who owe more than £1,000 in tax, it has been revealed that HM Revenue & Customs (HMRC) made inquiries into the tax affairs of 237,215 self-employed people last year, compared with about 119,000 in 2011-12, raising concerns that people who have made innocent mistakes are being specifically targeted.
The number of people investigated has quadrupled since 2011-12, while annual prosecutions have risen sevenfold in the three years. In addition, there were nearly 27,000 tax disputes waiting for a tribunal date in 2012–13, compared with only 13,456 in 2009–10.
It would appear that the taxman is focusing on collecting tax from “soft targets” such as teachers, doctors and lawyers. Being generally upstanding citizens, they apparently feel “anxious” if they get a letter from the taxman, so pay up without a fight.
HMRC is under pressure to claw back as much as it can of the estimated £35bn of tax lost every year, so appears to be targeting a number of the estimated 10 million people who fill out self-assessment tax returns, some of whom may have made innocent errors.
One area where it is common to make mistakes, for example, is in Capital Gains Tax (CGT), as many people are unsure of how the tax applies to second properties or what happens where properties are jointly owned.
It would therefore be advisable for anyone with more than simple financial arrangements to take professional advice before they fill out their self-assessment forms, or they could find themselves in receipt of an unexpected bill, or worse, notice of an impending investigation.
However, refuting the claim that it has toughened its approach to tax collection, a spokesman for HMRC said the increase in cases was only because it was holding more compliance inquiries where the taxman believed the wrong tax may have been paid.