HMRC - what happens when you report someone, how to they investigate?

[onetomanytotake]

Does anyone work for HMRC and know what they do when you are reported online? This is for a mobile beautician who has never registered with HMRC but who is earning between £300 and £800 a week, all in cash, on top of another partime declared job.

What investigations would be carried out, how long woudl it take to start from reporting and how likely is there to be a conviction or a request for unpaid taxes to be made?

How will reporting her enhance your life.

If this is you, I’d see an accountant and look at whether I needed to pay tax and if I did, I’d make a plan to pay it and write to HMRC with that plan.
If it’s a friend, I’d advice as above.
If it’s to drop someone in trouble for some sort of revenge, I’d think life is too short and that it says more about the person reporting someone trying to survive.

Thank you Cherry. My friend's ex has said he has reported her (not sure if he is bluffing).

If she's not declaring her income she's not making contributions to get a state pension etc.
Not sure she's doing much different than the other thread about the family accepting benefits for kids they no longer have. Why isn't she paying her tax?

HMRC can take several months/years to act on reports. In the meantime, they may or may not be doing research, i.e. checking social media, websites, business listings, etc., to see if there is any evidence to back up the report.

If they think there is something in it, they'll contact her.

Its a very very long drawn out process ( i do not work for hmrc) but from experience, i reported my old boss for under paying and not declaring work, false wage slips etc.

It took months and months for them to gather evidence. So tbh if he has dobbed her in she might get away with it unless he has very solid proof.

Tell her to keep detailed records so she can prove she isn't earning that from now on

And if she does continue to earn that...?

PMSL at tax dodging being just fine because she must be ‘trying to survive’. We all need housing and food. Let’s all just go self-employed and stop paying in. Jesus.

how likely is there to be a conviction or a request for unpaid taxes to be made?

Fairly unlikely for a conviction unless the amount of tax unpaid is huge or she doesn't co-operate.

As for the unpaid taxes - 100% she'll have to pay what she has evaded, plus interest, plus surcharges and probably plus penalties too. No way they'll let her off any tax that she'd have paid if she'd been honest in the first place. If they did that it would just encourage others to evade their taxes too.

Thanks for your responses all.

I think for that low level of earnings they probably wouldn’t bother. I think they generally go after those earning large amounts

I think for that low level of earnings they probably wouldn’t bother. I think they generally go after those earning large amounts

They definitely DO go after low level profits too. I've dealt with full enquiries when the tax at stake as only been a few hundred.

But an average of £500 per week isn't "low". It's £26k per year on which tax/NIC would be about £7/£8k per year. So over 5 years would be £35k-£40k. That's pretty substantial.

Why shouldn’t you report someone who is deliberately evading tax? It’s theft from you and I. Everyone has to contribute for society to function - why do some people feel that they shouldn’t?

Is she claiming benefits too...?

I'm ex HMRC, the majority of letters accusing tax evasion after being looked at turn out to be false accusations. Any that are fully investigated are risk assessed & the person who has been accused will be called in for interview after their tax records have been thoroughly checked out. Bearing in mind that HMRC staffing levels have been severely reduced, even with improved technology it is impossible to investigate everything. Investigating someone who owes a small amount may cost more than the amount that is collected even with penalties added.

No jelly, she's not claiming benefits too. She's middle aged and has been doing this for many years so the amount owed will be very significant (I wasn't aware until she admitted to me recently following the comment from her ex).

HMRC has a computer system where they can examine anyone's bank records, they have to have justification to be allowed to do this but it is possible. If your friend is not banking the money & operating in cash, it may be harder to fully prove how much she hasn't declared but they do have ways & means to estimate how much has been evaded. They do do investigations where people are monitored & observed, it isn't unusual for potential candidates for tax evasion investigation to be covertly watched, test purchases made, checking out Ebay, local newspapers, social media, adverts in shop windows are all ways that subjects for investigation are selected.

Thank you for your replies, I have advised her to see an accountant and sort herself out.