Mervyn J COTTENDEN, CPA

LATEST TAX INFORMATION

TAX WARNING

Mistakes caused by rushing to meet the end of month self-assessment deadline could have serious consequences.

Taxpayers are advised to be ultra cautious following the introduction on January 1^st 2001 of a new criminal offence of FRAUDULENT EVASION OF INCOME TAX which carries a maximum sentence of seven years’ imprisonment.

The Inland Revenue is taking a much tougher line on carelessness and non-compliance, and the new powers would intensify the fear of prosecution.

Cases of tax evasion can now be heard in a magistrate’s court, making prosecutions for the Revenue easier and cheaper to secure.

Taxpayers need to be absolutely certain that what looked acceptable when they completed the return will also look acceptable in court.

ACCOUNTS ARE PART OF THE TAX RETURN

What might appear to be poor judgement, carelessness, a cavalier attitude to completion of the tax return or even a mistake could come easily come over as fraudulent evasion in front of a magistrate or jury.

It will take time to judge the impact of the new “fast-track law”, but it amounts to a massive increase in the Inland Revenue’s ability to prosecute people.

Previously, prosecutions for tax evasion were usually brought when either large sums of money or persistent offenders were involved, or when taxpayers had not told the truth when being investigated.

It was expensive and difficult to secure a conviction, but now there is the prospect that making a mistake could land people in court, so taxpayers need to be much more careful. The Chairman of the Inland Revenue confirmed recently that he expects taxpayer prosecutions to increase. This is a clear warning to taxpayers  – ignore it at your peril!!!

Self-assessment tax returns must be submitted by January 31^st to avoid a £100 fixed penalty. Longer delays could result in further penalties and interest being charged on outstanding tax.

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Last modified: January 19, 2001