The authorities are not asleep

It is tempting to assume that government departments are drawing back from exercising their powers to challenge taxpayers due to COVID disruption, but it would be unwise to assume this is the case. For example, in a recent legal action undertaken by the Insolvency Service, a construction boss was banned from running companies for nine years after he caused a company to submit false tax returns.

Although the charges related to activity that pre-dated the coronavirus outbreak, this action – and many others reported by HMRC and other government departments – confirms that the powers-that-be are not idle.

In the above case, investigators uncovered that between November 2011 and February 2015, the director knowingly caused the company to submit false tax returns. Invoices had been brought down to zero rated sales to reduce the company’s tax liability. The tax authorities determined that just over £225,000 was owed by the company, which increased to more than £426,000 when interest and penalties were applied for the deliberate concealment and failure to pay.

A voluntary undertaking has the effect that without specific permission of a court, a person with a disqualification cannot:

  • act as a director of a company
  • take part, directly or indirectly, in the promotion, formation or management of a company or limited liability partnership
  • be a receiver of a company’s property

Deliberate attempts to evade tax will always be pursued as and when the authorities discover the wrong-doing.

However, we all make mistakes and HMRC will be sympathetic if you can offer a reasonable excuse for any apparent transgressions. These reasonable excuses might include:

  • your partner or another close relative died shortly before the tax return or payment deadline
  • you had an unexpected stay in hospital that prevented you from dealing with your tax affairs
  • you had a serious or life-threatening illness
  • your computer or software failed just before or while you were preparing your online return
  • service issues with HM Revenue and Customs (HMRC) online services
  • a fire, flood or theft prevented you from completing your tax return
  • postal delays that you could not have predicted
  • delays related to a disability you have

You could probably add to this published listing disruption created by the COVID outbreak.

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