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Contractor accountants’ clients beware!

Contractor accountants’ clients beware!

Contractor accountants should be aware that HMRC is cracking down on individuals who defraud the system by wrongfully claiming tax credits.

In its latest initiative to catch fraudsters, the Revenue has written to 12,000 self-employed people warning them that it intends to investigate their claim. Recipients of these letters should contact HMRC and produce evidence to substantiate their claim.

Failure to inform HMRC of any change in income can result in an overpayment which claimants are obliged to repay. Failure to do so can lead to a fine, and if the deception is found to be deliberate, the claimant could face criminal charges and imprisonment.

David Gauke, the Exchequer secretary to the Treasury, said that HMRC is determined to adopt a tough stance when it comes to targeting tax credit fraud. Last year the coalition launched proposals to cut down on the billions lost to fraud each year. The Revenue has confirmed that it will use data matching and credit reference agencies to check for fraudulent patterns if it suspects an individual’s tax credit claim to be fake or inaccurate.

HMRC is also scrutinising the tax status of company vans due to concerns that National Insurance and tax contributions are being underpaid.

According to KPMG, the Revenue has been sending detailed questionnaires to some firms asking how they keep track of private usage of company vehicles. The employer is asked to define its definition of insignificant private usage, provide information regarding the last three year’s van policies and state whether the vehicles have mileage tracker devices fitted.

Employees using company vans for their own personal use should pay tax on a flat-rate £3,000 value for the vehicle and £500 for subsidised or free fuel.

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Image: Caution Tape by Picture Perfect Pose

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