An article in Saturday’s Times newspaper caught my eye and reminded me of one thing about my time as a Tax Inspector.  The article was about HMRC’s ‘Tax Evasion Hotline’ which they have set up to receive calls from members of the public regarding suspected tax-evasion.  Apparently, the hotline receives an average of 300 calls each and every day!  However few lead to prosecutions as many of the calls concern small amounts and/or vague accusations from neighbours.

The National Audit Office has identified the hotline as the least cost-effective method HMRC has of detecting tax-evaders but even so it generates twice as much tax as it costs to run.

What it reminded me of was the constant trickle of informers’ letters we used to receive in my tax office.  A recurring question I’ve been asked over the years is “how would the Taxman ever find out?” and one answer is that someone finds out what you’re up to and tells HMRC!  It could be a neighbour, an employee or even someone down the pub.  The letters we received at HMRC were usually anonymous and invariably signed “An Honest Taxpayer”.  You could usually tell how close the informer was to the supposed tax-evader by the amount of information they knew.  Vengeful ex-spouses would often know full details, right down to bank account numbers.

So, as always, honesty is the best policy when it comes to your tax affairs.  Otherwise, sooner or later, the Taxman will catch up with you.  So if you want to reduce your tax bill and be able to sleep soundly at night, call your Barnes Roffe LLP partner.