This is day 7 of our Tax & Accounting at Christmas Special, as we analyse the tax and accounting treatments of all things Christmasy and open a door in our Christmas Advent calendar to count down each working day until the Christmas holidays in the UK. 

This year, the Grinch has taken over some of our Advent doors. Be careful when you open your door, there can sometimes be nasty surprises...

Tax Collectors and Inspectors

Tax collectors 'pop up' from time to time in the Bible's New Testament. In the story of the Nativity, Mary and Joseph journey to Bethlehem to take part in a population census, the purpose of which might have been to register the population for tax. Saint Matthew was a tax collector in his day-job. 

Joseph was a carpenter and he may well have been self employed. If he was a modern taxpayer in the UK he would have registered as self employed when he started his own business.

Under income tax Self Assessment you self assess your own taxes and then pay them on time. If you are late your are automatically fined, see Late filing a SA return: automatic penalties

Late filing penalties apply for returns that are filed after 31 January online filing deadlines.

Late payment penalties apply if you fail to settle your liability on time.

There are also penalties for:

Under file now, check later, HM Revenue & Customs (HMRC) check your return after you submit it. 

If you are employed and under PAYE and do not file a self assessment return as your tax is all collected under PAYE and it is discovered that the wrong amount of tax has been collected HMRC may push you into Self Assessment. This makes it easier for HMRC to enforce the tax debt. If in doubt check your tax code.

Most tax collection is therefore automatic and part of the tax system. If you meet a Tax Collector they are most likely to be part of HMRC Debt Management and Banking (DMB) or a bailiff.

If you meet a Tax Inspector, it is highly likely that this will be on a visit following submission of an employer's PAYE return or a VAT return. Under income tax self assessment HMRC will open an enquiry into your tax return or part and a visit may only come later on in the enquiry, if deemed necessary.

Unannounced visits to your workplace or home are very rare and then generally only in connection with fraud.

HMRC has wide powers of investigation and officers may stake out a business to see how many customers visit and to record your sales. 

HMRC, cash and Making Taxes Digital

  • Sweden has announced that it will be cashless in five years time. This, in theory will make tax assessment and collection much easier for the tax authorities. 
  • Although the Bank of England does not yet predict when the UK will become cashfree, HMRC is currently mandating Making Taxes Digital.
  • When everyone keeps their accounting records online, HMRC's systems will be able to automatically test your data. See Making Tax Digital Timeline.
  • VAT registered business are being asked to sign up for HMRC's Making VAT Digital pilot.
  • Unlike Brexit, we can be sure that MVD will go ahead, however just like Brexit, if it will start, we are unsure when, (MVD is planned from 1 April 2019, Brexit stage 1 is planned from 29 March 2019). See MVD tool: who has to join?

Happy Christmas.

Back to our Christmas Advent Calendar