May 17th, 2012

Plumber in hot water won’t chill anyone

HMRC have issued a press release this week with details of a plumber who’s just been given a 4 month suspended sentence for tax evasion. Fair enough. The news is meant to be a deterrent to others contemplating evading tax. But is it? In this case the plumber set up in business in 1997 – the same year the Spice Girls were setting up their business. What have HMRC been doing over the years to take so long to find him? It’s not like he was running a complex shadowy off shore operation. Presumably he’s been driving round in a van, advertising locally and, in all likelihood, fixing the leaky taps of HMRC employees,

Occasionally I’m asked to advise someone on how they can evade tax. My reply is always the same – “I can’t help” and “you’ll get caught”. I go on about the sophisticated systems HMRC use to track evasion and how it’s not worth the risk. I’m sure I’ve prevented more tax evasion than this press release ever will.

There’s also a question mark hanging over the tax bill. A sum of £88,000 over 14 years is just £6,285 a year – for all tax evaded including VAT. There’s not enough information provided but if he was busy enough to be VAT registered I reckon his VAT bill alone would be around £6,000 a year. So that’s the other part of my anti-evasion talk scuppered. I always advise that if you evade tax you’ll pay more in the long run as HMRC will aim high with their estimates of the tax evaded. And it’ll be difficult to prove them wrong if you’ve got no records to base your argument on.

So, whilst the news is hardly a charter for tax evaders, taking 14 years to catch someone and then billing them what looks to be a fraction of the tax they owe won’t have too many determined tax evaders trembling in their beds.

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John manages a wide portfolio of owner managed businesses and oversees the smooth operation of the firm’s payroll department.

After obtaining his degree in mathematics from the University of Liverpool, John joined Jonathan Ford & Co in 2004 and qualified as a chartered accountant four years later. John likes to keep abreast of developments in tax and accounting and is responsible for the mentoring of junior staff.

Outside of work, John enjoys powerlifting and is a Liverpool FC season ticket holder.

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