HM Revenue & Customs has special task forces that investigate specific job sectors. Here we explain how the taxman picks its targets.
Tax crackdowns have arrived thick and fast in the past three years. Officials have targeted everyone from doctors to Avon ladies to claw back £35bn lost in unpaid tax each year – and more inquiries are in the pipeline.
Accountants claim that HM Revenue & Customs focuses on “soft targets” through special task forces that investigate specific job sectors.
They say middle-class professionals become anxious when faced with a bill for underpaid tax – and so are more likely to settle claims without dispute. The targeting of professionals began in 2007, but has become more prominent in the past three years, with the Revenue collecting almost £1bn.
Here we explain how HMRC decides which groups to target – and who is on its radar.
How job sectors are picked:
The taxman is not allowed to engage in “fishing expeditions”. Instead it must show evidence to justify wider inquiries.
First it collates as much information as possible from third parties, such as banks and local councils. This is fed into the Revenue’s powerful computer system, called Connect, which cost £45m to build three years ago and is said to hold more data than the British library.
A formula is applied to bring to the fore what would otherwise be undetectable information.
For example, the computer holds details of every property bought in the UK, as it has access to the Land Registry. This was instrumental in the Revenue’s crackdown on buy-to-let landlords who had not paid enough tax.
The computer also stores records from the Driver & Vehicle Licensing Agency, hospitals, insurers – and even the official list of gas engineers. All this data can be compared against an individual’s tax returns.
The computer joins the dots to give an indication of particular industries where there might be tax shortfalls.
Paul Noble, a tax director at Pinsent Masons, the accountancy firm, said: “The computer is the tax version of Big Brother, because so much personal data is being watched.
“The computer system has only been up and running for three years, but during this time it has already targeted several professions and there are plenty of others it will also be watching over right now.”
Scare tactics :
When the Revenue has enough hard evidence to launch a campaign against a particular sector, it offers workers the chance to get their tax affairs in order.
Letters are sent out to taxpayers suspected to have underpaid. A deadline date to repay anything due is offered. If taxpayers pay straight away they can avoid a fine. Those who do nothing, or challenge HMRC, will be investigated further. If found guilty, non-payers can face prison.
To “scare” people into paying up, the Revenue heavily publicises prosecutions, according to Dawn Register of accountants BDO.
A recent example of this tactic was on show earlier this month, when an eBay trader was imprisoned for two years for failing to pay tax on more than 500,000 sold items.
“For every campaign, one or two people are jailed and HMRC makes a huge song and dance about it,” Mrs Register said.
“The people they jail are always extreme cases, such as the eBay trader, but publicising the sentences handed out is part of the Revenue’s agenda to unnerve people into paying early without challenging the taxman’s claims.”
Who’s on the hitlist today?
The taxman is currently focusing on two areas: people with multiple sources of income and landlords.
Landlords are under scrutiny because the Revenue estimates that £500m is lost every year. It said thousands of landlords paid little or no tax on rental income, while others did not declare capital gains on second properties.
Last month the Revenue said 40,000 landlords were suspected of bending the rules. Letters will be sent out over the next four months, which will give landlords an opportunity to clear their name.
The “second incomes” campaign targets everyone from consultants and part-time taxi drivers to car boot traders.
Andrew Watt, a partner at Watt Busfield Tax Investigations, said this campaign started only in April and would be one of the Revenue’s main focuses over the next couple of years.
“With all the data they have at their disposal the Revenue will catch all sorts of people,” he said. “There is no end date given on the campaign, which is unusual, but this perhaps indicates that there is a big pool of tax sharks to be caught.”
Who could be next on the taxman's radar?
Expats could be next to feel the heat, experts say.
The Government could prevent expats who let out British properties from using the personal allowance (income on which no tax is paid). The proposals are under consultation. If they are given the go‑ahead, the Exchequer is expected to raise £400m a year.
The Revenue is also keeping a close eye on undeclared offshore bank accounts. It recently obtained powers that make it much easier for the Connect computer system to spot overseas assets.
“This is high on the agenda, so it is best to make a voluntary disclosure before the Revenue comes knocking,” Paul Noble of Pinsent Masons said.
Dawn Register of accountants BDO said solicitors and barristers could be targeted next. “The Revenue now has access to legal aid data, so if it spots a trend it could well take another look on a much bigger scale,” she said.
Click here to read the original article 'Are you next on the taxman's hitlist?'
After a poll on sunday found the Scottish pro-independence camp in the lead, the Government and the no campaign has been scrambling to convince voters north of the border to stick with the union.
We've heard repeated apocalyptic warnings from business leaders and the city, but there are signs that businesses across the UK as a whole aren't so worried about the prospect of a yes vote.
Vistage, the business leadership organisation, asked a representative sample of its members, primarily mid-sized and larger small businesses, how they felt independence would effect their company.
Just 20 per cent agreed that it would have a negative impact, while 6 per cent said they were uncertain but worried. 66 per cent said the impact would be neutral or better.
Vistage CEO Steve Gilroy said: "While many financial and large international businesses may not like the prospect of Scottish independence, it will have little impact on most small and medium-sized businesses in the rest of the UK.
"Whatever the result of the poll in Scotland on 18 September, our research shows that most owners of SME businesses in the rest of the UK will not be losing sleep over the result damaging their firm.
"Partly this is because Scotland is a relatively small market for most SMEs in the rest of the UK, and also because independence will not suddenly close the Scottish market. Whatever the result business will continue, although we can expect a hiatus amongst Scottish businesses should there be a vote for independence while they digest the implications."
Click here to read original article 'Most UK SMEs ambivalent about Scottish independence '
The Government has urged employers to be ready for the minimum wage hike which comes into force in just over three weeks.
The rate for workers aged 21 and above is set to rise from its current level of £6.31 per hour to £6.50 on October 1st , with severe potential penalties for those employers which fail to comply.
The wage rate depends on a worker’s age (£5.13 for those aged 18-20 and £3.79 for 16-17 year olds) and apprentices aged 16-18 will have a minimum wage of £2.73.
The provision of accommodation, uniform hire and on-the-job travel times can also affect the level that should be paid.
The Government has stepped up action against employers who flout the rules of late. Those guilty of not paying their workers correctly could face a fine of £20,000 and being named and shamed, or even being prosecuted.
Tips to help ensure you are paying the correct amount of National Minimum Wage:
- Check what rates you should be paying to each worker as there are different rates for different types of workers. Visit www.gov.uk/national-minimum-wage for more information.
- Have a conversation with your worker to ensure you have the correct details (e.g. check their birthdays, and whether they are an apprentice).
- Keep a record of the number of hours worked by each worker, such as a timesheet
system, to make sure you are paying them for the correct number of hours per week/ month.
- Keep your payroll updated for each worker to ensure you are paying the correct amount.
Click here to read original article 'Don't forget to prepare for the forthcoming minimum wage hike'
DIESEL company car drivers look away now: changes to company car business mileage rates by HMRC are targeting the key 2.0-litre and under sector.
While the business mileage rates, known as advisory fuel rates (AFR), remain unchanged for petrol, LPG and diesel engines larger than 2.0-litre, the reduction in rates, effective from Monday 1 September, for smaller diesel engines will hit a large section of company car diesel users in the UK today.
And likely to be the hardest hit are those company car drivers in the SME small fleet sector, because the majority of their company cars will come from the most frugal and tax-efficient sub 2.0-litre diesel range.
AFR is used to claim back business mileage in company cars or to repay private mileage if fuel is provided by the company so to avoid car fuel benefit tax.
HMRC reviews the AFR every quarter, basing its calculation this time on average fuel prices on 19 August from the Department of Energy and Climate Change and LPG average price quoted on the AA website.
The new company car business mileage rates are listed below.
Petrol: Company car business mileage rates from 01 September 2014
Engine size 1400cc or less: 14p - unchanged
1401cc to 2000cc: 16p - unchanged
Over 2000cc: 24p - unchanged
Diesel: Company car business mileage rates from 01 September 2014
Engine size 1600cc or less: 11p – 1p reduction
1601cc to 2000cc: 13p - 1p reduction
Over 2000cc: 17p - unchanged
Hybrid and LPG-fuelled company car business mileage rates
Drivers of petrol/electric hybrid company cars should use the petrol rates.
Drivers of diesel/electric hybrid cars should use the diesel rates.
Drivers of LPG company cars should use the following rates: Engine size 1400cc or less: 9p –unchanged; 1401cc to 2000cc: 11p – unchanged (LPG); Over 2000cc: 16p – unchanged (LPG)
The AFR business mileage rates are to be used by company car drivers and should should not be confused with Approved Mileage Allowance Payments, known as AMAPs, because these are the tax-free pence-per-mile rates applicable only when drivers use their private cars for business purposes.
Click here to read original article 'Diesel business mileage rates cut'
For many smaller businesses (particularly business to businesses) marketing equalled networking. But as a central way of promotion, those days are your business are long gone.
So what are some of the best methods to win new clients that work today? Alastair Campbell from the Ideal Marketing Company explains the three key areas that every organisation should now be looking into.
Some say that selling and marketing is a numbers game. It’s a question of getting out there and speaking to as many people as possible, but I’m not so sure. Think of it like this. You want to make a hole in the wall, so you run at it as hard as you can. You knock yourself out; when you regain consciousness you walk back 20 feet and run at the wall again. You can do this all day, but you aren’t going to make much impression on the wall – and I’d suggest that you’ll end up in a worse state by the end of the day than you were at the start.
What if there was a better way of knocking a hole in the wall, or perhaps better still, walking around it?
I’d suggest that a way of getting around the wall is to focus on three essential areas of marketing:
◾Attention
◾Conversion
◾Retention
The problem is, if we put all our new business focus on any one of these (and ignore the others), then results are likely to be patchy at best.
So here are a few ideas for specific marketing in each area – and how to apply them.
Gaining people’s attention:
You can’t sell to somebody until you have their attention. You need to interrupt people’s thought pattern with your message before you can explain the service you offer. For example, nobody is walking around thinking ‘I’d love to speak to a builder’. But they might be walking around thinking ‘how much is this roof repair going to cost me?’ or ‘what is the best way to extend my house?’ This gives you a chance to get people to tune in to your message, to get their attention.
One of the best ways to do this is to create an information rich product with a compelling headline / title. A builder could mail a booklet offering free advice on the most creative ways to add space to your home.
Other businesses could consider some of the following:
◾A free e-book on preparing your business for sale
◾A recruitment agency may create a short video demonstrating interview techniques to get the best out of candidates
◾A law firm might publish a free report on the six questions you should ask a divorce lawyer before engaging them.
In each case, you are creating a valuable, but low cost product that is of great interest to a targeted group of people. Some people will not be interested in specific activities, for example, some companies will not be hiring at the moment, but for those who are, or considering doing so in the near future, the video is certainly going to be of interest.
Any of these guides (and hundreds of variations thereof) will get the attention of the people you want to speak to, when you want to speak to them.
Once you’ve prepared the guide, you now have a reason to speak to people, call them, write to them and e-mail them. You also have something to post on your blog, tweet about and post on your LinkedIn or Facebook pages. Each time there is something in the news about the subject, you have another reason to repeat the message with a new topical twist.
Converting the curious:
Getting people’s attention is the hard part. However, even when you have a prospect in front of you, it’s easy to let them slip away.
High pressure sales techniques are almost certain to do more harm than good, so here are a few ideas to gently give confidence in your services if you are meeting clients at your offices.
Make the meeting room comfortable, uncluttered and professional. Messy files piled high, a bulging in-tray or a constantly ringing phone give the impression that their work won’t be given the priority it deserves.
Where possible, a special meeting room for prospects should be used rather than an individual’s office.
What proof do you have of your previous successes? Convincing evidence can come from four possible areas.
1. Awards, accreditations, qualifications – any certificates, awards, photos of prizes being handed over all help to add credibility to your professional status.
2. Media coverage – have you been featured in the press commenting on industry matters, helping community causes or perhaps winning some of the above mentioned awards? If so, why not highlight these press cuttings in a cuttings book on the table? A second copy of this book could be in the reception area.
3. Case studies – for many people new areas of investment are the ultimate grudge spend. Given the choice, they’d either do it themselves or are hesitant to work with someone new. In fact, they are not buying your time; they are buying the RESULTS that they want you to achieve. So, in order to make them feel better about the hiring process, you can show how you have specifically helped other people.
A collection of case studies could include examples of different problems within one industry, or problems relevant to different sectors within the same industry. Each should show how, by employing your services, your clients were able to turn things around and get better than expected results.
You might not always need to go into precise details, or even name names, but 300 – 500 words that explain the results you were able to achieve with past clients can be a significant reassurance to a reluctant visitor.
4. Testimonials – similar to case studies, but usually much shorter and written word for word by happy clients. Testimonials are an endorsement of what you’ve done. The best way to get a client to say something about what you have done is to ask them – either in person, in an individual e-mail or as part of a survey.
One client of ours received about 3 letters a year without asking, but over 60 a year when his clients were prompted gently – quite an improvement.
In all cases, these subtle messages are there to reassure and reinforce your words and deeds.
Another simple way to help the conversion process is simply to keep your word. If you say that you’ll send a letter the next day, do it. If you say you will call at 3pm, make sure you do so – or if you don’t have the answer, still call and explain why you haven’t got the information and when you will have it.
The better the relationship you can build and the more confidence and trust you create, the more likely you are to leave the meeting with a new client.
Retaining the business:
Some clients may appear to be ‘one offs’ at first. But it is useful to consider how people will recall you. Most people will remember the service they received rather than the details, in a similar way that people think about their doctor or their dentist. You will remain their point of contact unless something changes the situation – or if you do a very bad job (as they perceive it).
A gentle, perhaps annual reminder that you are still there, still thinking about them, is always a good idea to stimulate memories and subtly keep you at the back of their mind. It’s also why regular publicity in the local press is a good idea to remind people that your company is doing good / interesting / helpful things in the community.
For business to business clients, it’s a different situation as you are likely to be called upon on a more regular basis. The focus here should be on education and support.
Education is about explaining the different range of services that you can offer. The company may have used you for a specific project, but making them aware that your skills can be applied to other areas of their business is important. This involves regular communication, explanations and campaigns that will help with awareness of your services.
Support can be through a variety of ventures. One popular area is joint seminars. In the past, I’ve run seminars with solicitors on creating a brand, whilst they have talked about how to legally protect a brand and trademark.
Running regular events for clients (and prospects for that matter), is an excellent way of positioning yourself as the expert at the centre of activities. It gives companies a reason to stay with you, and enhances your reputation.
If it’s hard to win new clients in the first place, the good news is that it’s relatively easy to retain them. Your job is really to keep clients updated on the full range of services that you could offer them, and explain how your services rather than cost them money, can in many cases actually save them money – or at least protect them from serious potential risk.
Some further thoughts:
The three stages of marketing hold true for most organisations, but are certainly true in the most competitive business environments. By splitting your activity into the holy trinity of marketing: attention, conversion and retention; you can be sure that you are making the most of your marketing spend.
However, in 2014, you may need to go a little further. We are living in a world of information overload, where the under 20s are just as likely to learn about the latest news stories on Twitter or Facebook as they are from the TV news. Tomorrow’s newspaper is an age away for many. With hundreds of e-mails pouring in every day, and a hundred demands on our time – where are your communications going to sit with prospects and clients?
Most will be ignored of course (and this has always been the case), but now more than ever we need to create messages that are ‘remarkable’. Standing out from the crowd is the only way to get noticed today and so, even doing all the right things is not always enough.
Creating a strong benefit led message, creating a brand around it and presenting it in a way that people will notice and remember should be central to your strategy. If you can’t cut through all the other messages, then you won’t get far.
Ultimately, effective marketing is far more than a firm handshake over a glass of warm Chardonnay at a Holiday Inn. If you are to succeed and thrive in today’s competitive economic climate, it must be a central and ongoing part of your business growth plans.
Click here to read original article 'Beyond networking'
