Would you shop a very good friend to HMRC?

[Readingonthetrain]

I almost certainly never will, but just wondered what other MNers thought.

It’s one of my best friends. She owns 2 properties. One has been rented out for 15 years, the other for 5. She had never filed a tax return and paid tax on her letting income. She has always found tennants through gumtree or by word of mouth, so never likely to be caught if HMRC went through a letting agents files. She’s a higher rate tax payer. I have a vague idea how much she gets in rent, but no idea how much any mortgage payments are. But that isn’t really the point. It’s tax evasion. I told her years ago she should be paying tax on the income, so she definitely knows.....and besides which ignorance doesn’t wash with HMRC.
As I said I don’t think I’ll ever actually do anything about this........but in the same position WWYD?

No I wouldn't.

I hope she's caught and made bankrupt

I wouldn't, no.

How do you know she still isn't paying tax?

I don't know if I ever would but from my experience with clients and HMRC they are unlikely to take reports very seriously. They might, you never know.

No I wouldn’t.

Yes, report her. It's dishonest.

I couldn’t be friends with someone so dishonest.

Does she know that HMRC officials can enter premises without a warrant to investigate suspected VAT offences, and similar? They can enter by force, seize documents and search individuals and make arrests.

I wouldn't shop a friend, but I would warn them of what would happen if they got caught.

Yes, I certainly would report her. Tax evasion is crippling the country and it's certainly not all down to the fat cats. The country loses billions due to the "black economy", i.e. normal friends, family, neighbours etc not paying the right tax.

She'll get caught eventually anyway when she comes to sell one or both as the sale will be reported to HMRC on the stamp duty return which usually triggers HMRC to delve into the property to see if rental income has been declared. I see loads of this happening and HMRC are getting better at picking up these cases where people havn't been declaring rent - there's also the capital gains tax on the sale profits so it's a very lucrative ground for HMRC inspectors. They'll get he in the end!

I'd reconsider being friends with someone this dishonest, why won't she pay tax, the rest of us have to. If you dob her in she'll may realise its you as you've mentioned it before.

Yes I would

No.

I don't know how people do this without being absolutely terrified. Forgetting the moral side for a moment, I wouldn't be able to relax for a minute.

😂 do u expect people to say how dare she be shopped, she was quietly evading tax payments not bothering anyone!

Badbadbunny - I am currently in a facebook spat with a friend over this. They are complaining about celebrities and I have said that I believe the black economy has a much greater impact. Do you have any links?

How do you know that she isn't paying tax on rental income? Perhaps she prefers finding tenants privately or gumtree. If she hasn't had problems she may not see the need to change.

She'll be found out either way.

HMRC actually have quite sophisticated tools at their disposal to uncover people doing this. Gumtree is online, is it not?

Also, they'll see on Land Registry that she owns the properties... Not too difficult to then find out who's living there...

If she brought things up to date voluntarily the penalties would be reduced, and they'd be less likely to prosecute.

If she waits for them to start an investigation, then the penalties will be more severe and they could prosecute her.

There was a kind of "amnesty" a few years ago where people who'd done this could voluntarily tell HMRC and bring everything up to date (I.e. Pay everything that was due). When they run those opportunities (they've done various ones to target different demographics) it's always because they're about to get extremely aggressive about investigating and dealing with evasion in that area. It often means they already have details of people who may have been evading tax.

As a pp said, if she sells one, they'll be on her pretty quickly.

If you're so sure you won't do anything, why are you asking the question?

hollow I’m totally with you. 5p accidentally undeclared on my tax return and I have sleepless nights. We are pretty much the only people I know who put every penny we pay our nanny through the books.

Lindor last time I mentioned my tax returns (a couple of years ago) she reassured me she still wasn’t doing them.

thefaerieQ and Holy you might find you have few friends if you stop being friends with everyone who isn’t squeaky clean with their tax affairs - cash for the cleaner, cash for pretty much any house maintenance job. I also know someone who paid for a £125k extension in cash!! It’s a way of life for a lot of people.

Our accountant was telling us that there is (or was a few months ago) still an amnesty if people come forward and declare properties they are renting out but not paying tax on. He was doing several sets of properties at the time. He also said that they would definitely get picked up when the properties were eventually sold. I can't see why anyone would want to take the risk as the penalties are so large.

By the way, HMRC still need a warrant to enter premises and conduct searches. S8 PACE 1984

They can't just force entry or search premises because they feel like it.

From all I've ever heard anecdotally, masses of LLs don't declare their rental income. As a LL who does declare and pay, yes, I'd shop her.

A lot of LL rental income comes via benefits, which comes from the taxpayer. Last I heard, housing benefit cost the U.K. £25 billion a year.

Not long ago I heard from a 3rd party of one doctor telling another doctor that she was 'mad' to be declaring her rental income - 'We never have!' Might add that 2nd doctor was shocked.
High time there was a massive crackdown, and a lot more of them shopped. Successive governments - Labour as well as Tories - have been extraordinarily lax.

And paying for things in cash doesn't mean they aren't being declared and taxed.

Also, you round down income and round up expenses for tax returns (if you read page one of the form that's what HMRC instructs you to do), so £90.05 of income would become £90. £90.05 of expenses would become £91. HMRC does not remotely care about your 5p. You can sleep easy there.

No.

Mind your own business, leave it to the relevant authorities.

Also - friend? Really?!

I wouldn't shop anyone to HMRC
Not that it isn't the right thing to do but I think I would just let them know I don't approve and don't want any part in it
Y'know the way I do with friends who sniff drugs
Just don't bring it around me and don't let it affect our friendship. Mostly I find they end up shooting themselves in the foot.
I don't know of anyone who does this currently, but have met plenty who claim benefits they aren't entitled to etc. I don't shop them into HMRC but I don't approve and will never partake.
Some people are always going to be dishonest I try to keep them at arms length

Where I'm from Unless its someone harming a child or an elderly person
you simply don't grass on even your worse enemy let alone a good friend.
I know the would be a police matter rather than HMRC but You get my meaning.