The Taxman is writing to 12,000 self-employed people who claim Tax Credits, to check whether they have been understating their income. Your self-employed clients can claim Child and Working Tax Credits just like an employee, but their self-employed income is likely to be more variable than a regular wage or salary. If the income from their self-employed business has fluctuated wildly during the past recession, your client may well get one of those letters from the Taxman. Your client will be asked to supply evidence of their income, which will normally be their business accounts and possibly bank statements. You will probably need to help your client compile the information requested.The Taxman is also getting serious about tackling those who deliberately cheat the tax system, as opposed to those who make careless mistakes. He is targeting individuals and businesses identified as deliberate tax cheats since April 2009, and will regularly monitor all aspects of that person's tax affairs. This will involve asking for further information to support figures on tax returns, and possibly making unannounced visits to business premises.The monitoring will continue for two to five years, or as long as the Taxman thinks the person is a tax risk. Initially, about 900 people will soon be informed they are included in this monitoring scheme but this number may well increase in time. With thanks to BKN |
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