Ensuring compliance every step of the way.
Tax regulations are to ensure that businesses and individuals are paying the correct amount of tax whether they are operating at home or internationally. International tax regulation agreements are to ensure that tax information is automatically exchanged between countries that have signed up to the agreement. An example of this is Foreign Account Tax Compliance in the USA, known as FATCA, which is part of the US Hire Act 2010.
So that FATCA can be implemented in the UK, the US and UK governments signed and agreed to adhere to the ‘UK-US Agreement to Improve International Tax Compliance and to Implement FATCA’.
The UK government has also signed reciprocal agreements with its crown dependencies, including Gibraltar, Guernsey, Jersey and the Isle of Man to ensure that FATCA is adhered to.
Being tax compliant means that you must make your tax payments and produce and submit your information to your tax authorities in the correct format and on time.
Compliance checks are more commonly known as Income Tax Investigations in the UK. Normally, once a tax risk is identified by HMRC a compliance check will be carried out by HMRC Local Compliance.
Compliance checks are often carried out on partnerships or individuals.
The time a tax investigation can take will vary depending on the variables involved.
For a single aspect of a compliance check, it can take anywhere from between 3 to 6 months, whereas a full investigation can take up to 16 months.
Normally, the time limit for an HMRC tax investigation is 4 years.
However, in the event that someone has been visibly careless, submitting tax returns with errors, HMRC has been known to go back as far as 6 years.
A compliance check by HMRC is an investigation into the tax affairs of a person or company.
The purpose of a compliance check is to ensure that a tax return is correct, to ensure that a company or person is paying the right amount of tax and is making payments at the right time.
Ultimately, yes they can.
Banks and financial institutions are required by law to report any interest paid on savings, investments or into your bank accounts.
The 'taxman', or HMRC, can check that your disclosed expenses match with the electronic records of your bank accounts.
Normally, HMRC has 1 month from the date that you filed your tax return to make sure it notifies you that it will be launching an inquiry.
However, if you have filed your tax return after the deadline of the 31 January, HMRC can take 15 months from the date which you filed your tax return to launch the inquiry.
Yes. For income tax evasion the summary conviction is 6 months in jail, or you may get a fine of up to £5,000.
The maximum sentence for tax evasion is 7 years in prison, there is no upper limit for a fine for tax evasion.
Yes, if HMRC suspects that you have been deliberately avoiding tax they can go as far back as 20 years.
If they believe that you have been careless with your tax returns they can go back 6 years, in the event that they believe that any errors are innocent they can go back 4 years.
5 years after the January deadline for the relevant tax year. For example, if your 2017 to 2018 tax return was submitted online by January 31 2019, you must keep your records until the end of January 2024.