Taxman surfs web to make enquiries on your tax return
Published 30/06/2009 | 10:53
People think there’s just one big government computer and all information is shared among departments. It’s just not like that.
Today I am going to talk about some of the information available to HMRC from the web which helps them decide whose affairs need more scrutiny. This information can be used to launch an enquiry into your tax return.
The word ‘enquiry’ sounds quite soft and non-threatening but that term can include all types of tax investigation up to and including court prosecution.
The other time information is used by HMRC is once they are in the middle of a tax enquiry to assist them in assessing if you are telling the whole truth.
Probably the single biggest change in information since my days as a tax inspector is the internet. Just as most readers use it regularly, so do HMRC officers.
You should always remember that for many people a lot of information about them is publicly accessible on the internet.
The tax people also use a variety of search engines less well known than Google. These will fish out information which Google would miss.
So what sort of information — of interest to the tax-man — is out there on the web? Minutes of your golf club AGM might name you. That tells HMRC you are a member and must find the money to pay the sub and probably socialise there as well. (Private spending is often used to prove that the full business income has not been declared.)
The value of your house in Northern Ireland for rating purposes is on the internet at http://tinyurl.com/lt74fq
Planning applications are on the internet, as is discussion within the council about specific applications. I have had tax inspectors say to clients ‘I see you applied for planning permission last year’.
If you have held a public appointment — say being a member of a quango — chances are your name appears on the web. Then by looking further into that quango’s website the tax people might find a pen picture about you — perhaps one saying how you enjoy riding your horses. Since horses are very expensive animals to maintain this is manna from heaven for a tax investigation.
Even attending a conference can result in your name appearing on the web on a delegate list. If you spent a fair amount of money on it again this is valuable to HMRC.
They will look to see if you could afford it and how you paid for it. If you say you never have much cash, but paid a £1,000 hotel bill in cash then you will have some explaining to do.
Newspapers archive their articles on the internet and so if a story has appeared mentioning you it could be discovered by the tax people.
Perhaps you were photographed standing beside your private plane, or having a party on your yacht!
If you have children, what about their web entries? I am not only talking about their Facebook pages. What about school websites and listings of pupils?
This could tell the taxman that your children go to an expensive school (where did the money come from for that?) It could say your daughter travelled with the team to New Zealand in 2005 — and again it would be expected this would cost the parents something.
Do your children have websites? Is there anything on there that could be a problem? (For example: ‘We’ve just spent a fortune on our house, and now we’re off to the Caribbean for a break.’ Again this lets people know there’s money about. Not a problem at all unless you are using untaxed money to fund your lifestyle.)
I suggest that anyone who files an annual tax return, and also anyone who might have something to fear from HMRC, should consider what about them — or their close family — might be on the web.
Use a variety of search engines and see what you can turn up. Don’t just look at the first page of hits.
For example if your name is Josephine Elizabeth Bloggs then every six months or so is search for the following:
“Josephine Elizabeth Bloggs”
Your house street address “101 Any Street” Belfast.
Your spouse or partner’s name (in same combinations as above.)
Children’s names (in same variations.)
This might turn up a surprising digest of information about the Bloggs family. What does the web say about yours?
Adrian Huston, a former tax inspector, is a director of Belfast tax and accountancy firm Huston & Co — www.huston.tv or 028 9080 6080