Builders 'most likely' to botch up tax returns

Builders, taxi drivers and contractors struggle most with their tax returns, according to accountants.

In a survey by Bloomsbury Professional, a third of those questioned regarded builders as most likely to provide incorrect information.

Accountants labelled the construction industry as high risk due to frequent use of cash payments and poor bookkeeping.

Taxi drivers were regarded as the second most likely to provide incorrect information, with personal service company contractors, such as IT consultants, in third place.

At the other end of the scale, only 2% of those surveyed said shopkeepers would submit incorrect returns.

Martin Casimir, of Bloomsbury Professional, said: "Perhaps more than any other trade, builders frequently deal with quite large sums of cash. This makes accurate recordkeeping challenging and creates numerous opportunities for tax evasion.

"Cash-in-hand with the promise of no VAT is still incredibly common. With VAT now at 20%, the incentive for cash payments is greater than ever.

"To be fair to builders, it's just as often the customer who asks for a cash-in-hand discount. With competition fierce, the temptation to undercut a rival quote can be irresistible."

HM Revenue & Customs (HMRC) launched a new taskforce to tackle tax evasion in the construction industry in November 2011. The taskforce, a specialist team monitoring tax compliance, targeted self-employed builders and construction traders in the North West and North Wales who were over-claiming expenses or suppressing sales.

Plumbers, etraders, fast food outlets and electricians are just some of the additional sectors the department has targeted.

BusinessZone.co.uk's sister site AccountingWEB has provided a full list of HMRC's taskforces to date, which you can view here.

Thousands of business owners are currently working on submitted their Self Assessment tax returns. Last week, HMRC announced that due to an expected call centre strike on Tuesday, the deadline for submissions has been extended from 31 January to 2 February.