Stephen J. Dann
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HMRC ENQUIRY LETTERS


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How do HMRC uncover undisclosed Income?

1. Tracking tools and search engines
HM Revenue and Customs have their own specialised information-gathering tools at their disposal, including web-trawling software, to help catch eBay traders in addition to publicly available internet and social media sites such as Facebook, Linkedin, etc.

2. Social and traditional media alerts
Individuals proudly boasting about their yacht on a Facebook and similar sites while declaring next to no income on their tax returns will come to the attention of HMRC (see especially 6 below). HMRC also has access to shipping registrations. Press articles and media coverage have also been the cause of HMRC enquiries into an individual’s affairs. Once HMRC has a suspicion that an individual has underpaid tax liabilities, it has a range of powers and tools available for it to enquire into the individual taxpayer’s affairs.

3. Statutory demands for information
Taking the example of buy-to-let landlords who have omitted rental income from their tax returns, HMRC may obtain information that will help with their enquiries without requiring the landlord's co-operation. HMRC has the statutory power to issue a demand to any tenant (whether a company or an individual), compelling them to inform HMRC how much rent they pay and to whom it is paid. This information can then be compared to the landlord’s tax return and is therefore a relatively simple way for HMRC to identify whether the income has been declared correctly.

4. Phone checks and official records
Rental adverts may also be reviewed and lettings agents may be contacted. Remember, it is relatively quick and easy for HMRC to check with the Land Registry who owns a specific property. HMRC will also have access to housing benefit records.

It is similarly difficult to escape HMRC’s clutches when the time comes to selling the property. Tax inspectors regularly review local newspapers for houses for sale and the internet makes this process even easier, especially with the abundance of websites that show historic house sale prices.

5. Information-trawling software
HMRC has also invested in a computer system which allows it to bring together information on property sales and collate a historical list of properties purchased by a particular landlord. This information can then be compared to what the landlord has declared for capital gains tax purposes.

6. Hotline tip-offs
In addition to the more sophisticated tools, HMRC still receives significant amounts of information via its Hotline from disgruntled third parties, such as neighbours or vengeful former spouses. While some of these should naturally be taken with a pinch of salt, many individuals have found themselves subject to serious tax investigations following a tip-off from a wronged former spouse, neighbour or business rival.

Ultimately, it is a far better idea if you do have any undisclosed tax liabilities to come forward before HMRC finds you. Those who make unprompted disclosures will face far lower penalties than those found by HMRC’s investigators, and once their tax affairs are up to date will have the peace of mind that they no longer have to look over their shoulder, fearful of that HMRC enquiry letter landing on their doormat.


H.M.Revenue and Customs and other Government agencies, such as the Department for Work and Pensions regularly issue enquiry letters in order to find those individuals, especially expatriates, who are evading UK taxes, or claiming benefits which are only payable to UK residents. In most cases there are no taxes due, but the authorities need to be assured of this by supplying the correct information, explanations and documentation in response to their enquiry letter.

In many instances an enquiry can be resolved for a very modest fee, often by completing a UK Self Assessment Return form or by registering under the non-resident landlord scheme. These two aspects are covered on separate pages on this website:

Ex-patriate Self Assessment Returns
Non-resident landlord schemes


I have considerable experience in responding to enquiry letters.and you will find appropriate recommendations on Linkedin and my testimonials page to confirm this. View testimonials and business connections:
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The Daily Telegraph ran an article on the current campaign by the Department for Work and Pensions which may be viewed HERE
and which I reproduce below..

............................................................................................................................................................................................................. Rosa Prince, Political Correspondent8:00AM GMT 27 Dec 2010

Officials at the Department for Work and Pensions will work with their counterparts

in countries where the most fraud is carried out by British benefit claimants.

Top scams are said by the department to include claimants not informing the authorities

that they have moved abroad, and those on benefits working overseas while being funded by the taxpayer.

In some cases, relatives failed to inform the state when a claimant died overseas in order to continue collecting their money

. Cheats claimed benefits without declaring that they owned substantial assets, including property and even yachts.

Others exaggerated illness or disability and claimed sick pay while enjoying an energetic lifestyle in the sun.

Among the countries which will be targeted as part of the scheme to crack down on the £ 66 million of fraud a year committed

by Britons based overseas include Spain and Portugal, where special hotlines have been set up for ex-patriates to report abuses.

Officials estimate that the most United Kingdom-born cheats are based in Spain, the United States, Bangladesh and Pakistan.

Officials will also make contact with the authorities in countries as far a field as Thailand and Sweden.

Lord Freud, Minister for Welfare Reform, said: "Abroad fraud cost the taxpayer around £ 66 million last year.

“This money should be going to the people who need it most and not lining the pockets of criminals sunning themselves overseas.

"We are determined to stop benefit thieves stealing from the British taxpayer and recently launched our hotline in Portugal

to make it even easier to report benefit crime."

As part of the crackdown, fraud investigators will work with overseas organisations such as land registries,

as well as the Foreign Office and UK banks to identify scams.

A recent caller to the Spanish fraud hotline was responsible for catching Angela Walker, a benefit cheat originally from Birmingham

but now living in the southern town of Granada.

She had claimed more than £ 10,000 of Income Support and Child Tax Credits since 2006,

despite living abroad and with a partner. After pleading guilty in November, she must now repay the cash.

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