Put simply, tax evasion is an act of tax avoidance. Avoiding tax is illegal, often seen as an attempt to give a late underpayment of tax or a non-payment to HMRC. Income tax evasion could result in being sentenced to four years imprisonment for breaking the law and committing the crime.
Deliberate tax avoidance typically occurs when businesses don’t report money-making activities to gov.uk. Filing reports and making the government aware of your income is essential under guidance from the law.
Staying in compliance with both gov.uk and HMRC is key otherwise you could face a tax evasion investigation.
LJS Accounting Services are well-established in the industry, giving expert advice to clients who are faced with tax-related issues. To find out more information about tax evasion penalties and the services that we offer, continue reading.
What is Tax Evasion?
Deliberate tax evasion is when someone avoids paying a tax payment that’s due. Many tax evasion cases involve corporate businesses that sit at the top of the list in regard to wealth within a variety of different industries. Regardless of the field of work that you’re in, paying your taxes is completely necessary.
Although the benefits of tax evasion might appeal to you, tax investigations occur all the time because so many people get caught. Similar to other money-making schemes such as fraud, tax evasion is illegal and mustn’t be committed.
Paying taxes is important for the economy – without taxpayers, the government is deprived of funding vital public services such as schools and community-based projects.
We all must pay taxes, especially if we want to see improvements across the UK including better road conditions, hospitals and the levels of poverty in certain areas.
Penalties for Tax Evasion Cases
Deliberate tax defaulters are likely to be faced with a penalty charge after being investigated by HMRC. Errors in tax returns don’t go unnoticed, although many organisations and people in business believe that they do. The tax evasion penalty is up to 200% of the tax that is due.
In worst-case scenarios, jail time could be on the cards for those who have been found to repeatedly go against the law with tax evasion.
The summary conviction is 6 months imprisonment or a fine up to £5,000 for those that carry out income tax evasion, but the maximum tax evasion fine can reach double figures.
Similar to tax evasion, VAT evasion could mean that you’re faced with an even larger fine of up to £20,000 and Crown Court cases can be a maximum of seven years in prison.
There’s no reasonable answer to tax evasion, and although many disputes occur in court, tax evasion sentencing is common.
Examples of Tax Evasion
There are many tax evasion examples, with a few being the most popular methods that people tend to use. False identity is up there with one of the most common ways to commit tax evasion, with many people assuming the identity of someone else in order to carry out taxable transactions under their name.
Crypto is also used for tax evasion. It’s hard to investigate tax evasion when there’s no traceable record of any transactions in your name – this is why so many individuals use cryptocurrency to perform tax evasion.
With an array of tax avoidance schemes out there, the stamp duty avoidance scheme is used by many. Stamp duty avoidance involves a set of transactions that save you money on tax.
HMRC easily pinpoint those who are taking part in stamp duty avoidance schemes, finding them guilty in court.
How LJS Accounting Services can Help
LJS Accounting Services has been operating now for over 10 years, maintaining many happy clients along the way. Our team are award-winning tax advisers, giving expert advice to each client regarding their financial status and company well-being.
We offer an array of top-quality services including VAT & Bookkeeping, Personal Tax and HMRC Investigations and Disclosures, for the times you might get interrogated by HMRC themselves.
With many businesses and entrepreneurs just starting out, it can be hard to get a grip on how tax works and why you need to pay it, which is why we also offer professional Start-Up Advice.
To find out more about how LJS Accounting Services can help you, feel free to reach out to a member of our team today by calling one of our offices, or alternatively emailing us at info@ljsaccountingservices.com – we look forward to hearing from you.
