The time has come again where you need to start thinking about your personal tax returns (Self Assessments). Unlike previous years your tax return is becoming a very important and crucial document in many days to day activities. May it be applying for a mortgage, Loan or an application to rent a home. Getting this right should be the priority and ignoring them is no longer an option to consider.
There is also increased surveillance in place. HMRC has a reliable weapon at his disposal, designed to spot undeclared income quickly and easily. Making use of the many public and private data stores that hold details about businesses and self-employed individuals, HMRC’s Connect system reduces the time needed to perform a background income and outgoing check.
Connect already has collected an additional £3 billion for HMRC in tax revenue since 2008 after successful hunt in numerous databanks of personal and commercial information. The principal of the software is to flag discrepancies between taxpayer’s tax return and its own investigation. The searches take couple of seconds and are taken frequently to capture new information.
It will process information about your bank account balances and income, and match this with other information – mainly your tax return and your PAYE data submitted by your employer.
Also, it can spot undeclared, taxable savings, property rental income, the amount of capital gains tax, etc. Now the system can crank into action to check that your stated sales fit with this electronic record of card takings. If you drive an expensive vehicle Connect will want to see earnings to match. You might be able to satisfy HMRC that the vehicle was bought with a cash gift, but you can then expect to it ask who gave you the gift, and if it was an inheritance whether the appropriate tax was paid.
Moreover, HMRC uses data-collecting programs or “robots” to patrol popular online marketplaces such as eBay or Gumtree to see whether your level of activity is suspiciously high.
From this year Connect’s powers will extend further still. September 2016 is when HMRC starts having access to files held by banks and other financial firms based in British Overseas Territories, such as the Channel Islands; and from 2017 Connect goes truly global with access to data in a further 60 countries.
Call your accountant today and see if you need to register for Self-Assessment and ensure you be proactive and account for all income before it’s too late. We at Outsourced ACC provide guidance and advice throughout the year as part of our service when you sign up us as your agent for taxes.
Irina Stucere. Assistant Accountant