Tax avoidance in the UK is becoming progressively harder due to new software developed for use by the HMRC. This software, known as CONNECT, is able to communicate with vast data banks to retrieve information links to individuals. The CONNECT system was first introduced in 2010 and cost £80 million over seven years. This clever piece of software went on to retrieve over £1.4 billion in taxes by 2011. This advanced software finds information linked to individuals such as businesses, income, transactions and assets. Once it has this information, the system checks for any discrepancies. If the system returns discrepancies, CONNECT flags that individual. Flagged individuals could receive COP9 investigations, which may lead to prosecution or HMRC penalties.
COP9 (Code of practice) investigations are carried out on an individual when there is a suspect of tax fraud. These investigations are among the most serious of HMRC investigations, which may lead to criminal investigations. The HMRC will investigate a case in full. This includes retrieval of information regarding financial and business affairs from third parties. The HMRC allow two options in a COP9 investigations, an individual can either accept a contractual disclosure option or reject this offer. A contractual disclosure facility or CDF offers an individual the chance to disclose any loss of tax that has been brought about by deliberate conduct. Tax accountants in Birmingham and the rest of the UK can help with a CDF documents to help a case. A rejected offer or poor CDF may result in fines and prosecution.
The Accountancy Solutions in Birmingham and at Kensington High Street, London are able to offer expert advice in regards to tax. HMRC compliance checks using the CONNECT system are carried out daily to flag up tax avoiders. The CONNECT software gathers over a billion records from a variety of sources. This includes taxpayer records as well as information obtained from the Internet. The software itself uses a smart analytical approach to discover irregular tax patterns. In one case, the HMRC used the CONNECT system to flag an individual with 11 undisclosed properties in various Mediterranean countries despite declaring a UK income of just £6000. This award winning software is able to flag an individual in mere seconds. It has data access to a vast number of countries and companies such as eBay and Etsy. In 2017, the CONNECT system will have access to a further 60 countries, making tax evasion increasingly difficult.
HMRC amnesty schemes were created to encourage individuals to be honest with their undeclared tax. HMRC technology such as the advanced CONNECT system means that more tax avoiders are prone to investigation. In some cases, the taxman has the ability to go as far back as 20 years to retrieve tax as well as penalties, which can reach up to 200%. Underestimating the taxman is unwise in the long run, as it is predicted tax avoidance will be even harder in the future. Choosing an honest accountant can save individuals on high penalties.
If you have received a letter from HMRC regarding COP 9, please contact The Accountancy Solutions urgently for a free and no obligation advice on 01216297768 or 02070784001.