If someone is self employed and not paying tax how would the revenue find out?

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  • 10 years ago
    Best answer

    Sheva G got it mostly right.

    It kind of depends on what they're buying as well as their savings.

    If a self employed person is renting their home, and putting the rest of their money under the mattress, the IRS would have a hard time finding out. But if the person owns a house and all their money goes into savings or investments the IRS can make a pretty good estimate of their income based on their property taxes, interest paid on a mortgage and investment income earned over the year. Most self employed to do own their homes and have savings.

  • 10 years ago

    There are lots of ways of finding out, which vary according to what sort of self employed business you are carrying on. Just be aware that if your customers can find you, so can HMRC. Unfortunately it often takes a few years before you find out that HMRC know about your little fraud(they wait to see whether you come clean of your own accord), by which time you not only owe a great chunk of taxes and compounded interest, but have amassed extra penalties for letting the default go on so long.

  • Anonymous
    10 years ago

    By noticing you are not paying any tax and investigating your income. You are on record at the tax office if you have a National Security Number. I take it you use the same public facilities as everyone else? The NHS, the police, the fire brigade, etc? You expect the council to collect your rubbish and keep your community a pleasant place to live? What makes you think you shouldn't contribute? If you don't pay tax you are a sponger and a thief, basically.

    Trouble: this answerer is in the UK, not the USA.

  • Anonymous
    10 years ago

    While 'some' of the Answers 'above' are "PARTIALLY" true: The IRS does NOT have a staff BIG enough to watch EVERY WORKER in the USA!

    You may/can get caught 'if' someone Reports you/ 'tips' off the IRS! (However, they will need your FULL Correct name, your Social Security number and the 'type' of work you are preforming!

    Many people get away with it for a long time BUT, sooner or Later it will catch up with you.

    1. Filing Taxes after YEARS of "No-Income"! (Taking deductions on Home, Car, etc....WHERE/HOW, all of a sudden, you got 'them'?) Your 'PERSONAL Checking account?

    2. Applying for a Home or Business Loan. (Listing all your Cash, Stocks, Bonds & Securities you hold)

    Of course, there are WAYS so NOT to Report 'ALL' of your Income (CASH)

    It's up to you to see if it's worth it.

    REMEMBER: Once they catch you and sink their 'teeth' into you you'll be HOUNDED/WATCHED FOREVER!

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  • Is this your sister? See, people know things about you already!

    If this has been going on for three years, it's best to make a clean breast of it to HMRC.

    HMRC will find out by checking her "employer's" records, or by checking the records of people with whom she deals.

    Anonymity is not an option.

    http://answers.yahoo.com/question/index;_ylt=AjFsG...

    Source(s): Accountant 40 years
  • Anonymous
    10 years ago

    Easily. If you're making money, then you're buying stuff. If you're buying stuff, then you're making money and if you're not declaring the money you are making and not paying taxes on it, then you are committing a very serious white collar crime.

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