Many contractors end up with tax problems at some stage in their careers.
The IT Consultants who went to jail for tax fraud made a basic mistake
They hid money that the earned in Germany in the Isle of Man and did not declare it to the tax man
Two Wigan based partners in an IT Consultancy were sentenced to jail recently for tax fraud.
They jailed for 15 months and the other for 12 months.
They made the huge mistake of trying to hide money from the tax man even after they were under investigation.
Once an investigation starts the main rule is not to hide anything from the taxman.
If you are straight up with the taxman then you face fines and penalties.
If you withhold information then you face jail.
This is why the jockey Lester Piggott went to jail for 3 years.
At the end of the investigation he signed a statement saying that he had declared all bank accounts and sources of money to the taxman.
It was then found that he had another £3m in a Swiss bank account that he thought they would not find out about.
Keeping Money Hidden
Although it may be tempting to keep money hidden and not declare it if you think the taxman will not find out, it is just not worth it.
Once you are being investigated, tell the truth and take the financial penalties. It is much better than a jail sentence – when you will not be earning any money.
Of course, get the help of your Accountant and get a lawyer too if needed.
However, don‘t even think about hiding funds from the taxman.
These guys left the money they made from their German operation in the Isle of Man.
However, the taxman already knew about it because the Isle of Man has an agreement to reveal the names of UK residents with accounts on the Isle of Man.
This doesn‘t affect IT Contractors who use Offshore Umbrella Companies as they get their money back in loans and don‘t have accounts there or hold money there.
So, if the taxman is after you, just say to yourself ‘It‘s a fair cop‘ and reveal all taking the advice of your Accountant of course.
Don‘t even think about hiding accounts and money from the taxman even if you think they won‘t find out.
Unless you fancy a period behind bars.
If you have tax problems the best way to deal with it is to contact your Accountant. He, or she, will know what it is best to do.
Here is a firm who liaise with HMRC in order to strike a deal with them over your tax debts. Click on Tax Debts Resolvers to find out more.