In a recent article in the Daily Mail, it was revealed that Revenue inspectors have taken to using Google Earth to catch out tax avoiders by spotting clues to the individual’s lifestyle and wealth, such as cars and home improvements.
HMRC is battling to close a £35billion gap between what it believes is owed and what is actually collected in tax, and is claiming that this hidden economy is costing taxpayers £9billion a year. However, the Revenue has spent almost £1billion in the last three years alone trying to enforce the law by setting up taskforces and buying a supercomputer for £50million, called Connect, to catch out tax avoiders.
Knowles Warwick’s Tax Manager, Michelle, has seen clients caught out by this type of spying before:
“Where I worked previously, a client had an enquiry which had been generated from a Google picture of his house where there were four cars on the drive.
As he was a director of a limited company HMRC expected to see these on P11D’s and, as they had not been declared, the Revenue opened up an investigation into the company.
It was finally proven that the directors had bought the cars privately, but it gave HMRC a foot in the door and they then queried directors’ payments, sub-contractors status, and found that the company had invested in a property but not declared the gain on the CT600.
All this from a Google picture!”
The moral of the story? Don’t let HMRC catch you out; speak to your accountant if you are worried about a potential investigation. HMRC are only spying on individuals who they already have reason to suspect are tax avoiders, make sure you don’t fall onto their radar.