Is the taxman looking at YOU?

Updated: 05:12 EST, 20 January 2010

Watch out! The taxman could be snooping through your affairs.

HM Revenue and Customs' recently announced crackdown on doctors is just the start of a widespread assault on professionals and middle-income earners.

Solicitors, barristers and accountants are believed to be high on the hit list and others will follow in a draconian attack on tax evaders.

HMRC was last year granted 5,492 requests to spy on Britons under the Regulation of Investigatory Powers Act 2000 - an 80pc increase in four years.

Football manager Harry Redknapp has been charged with tax evasion

This act was supposed to fight terrorism, giving police and other authorities power to look at suspect emails.

However, the biggest fear for most ordinary taxpayers is finding that they are going to be investigated by HMRC. Don't assume if you don't submit a tax return you can't be investigated - you can.

All Britain's 30 million taxpayers are at risk. But if you have been honest and have records to back up your figures, you have little to fear. HMRC points out that tax evasion costs about £25 billion a year.

There are two main types of investigation: an aspect inquiry or a full inquiry. If you're going to be investigated, HMRC usually has 12 months from the date you send your return in to start an investigation. But in some cases it can go back 20 years.

In 2007-2008, 141,424 taxpayers were investigated.

John Whiting, tax policy director at the Chartered Institute of Taxation, says: 'If you get a letter saying you are being investigated, don't panic. But for goodness sake, do take it seriously.'

Mike Warburton, senior tax partner at accountant Grant Thornton, says: 'A simple aspect inquiry could take one letter providing the information the Revenue wants. A full-blown inquiry can take a huge amount of time and, if you have professional help, can be enormously expensive.'

In an aspect inquiry, HMRC might ask you to send a copy of your interest certificate to prove that your figures for your savings interest are accurate. In a full inquiry, you will have to prove everything on your tax return, and produce evidence backing up your figures.

You might be called in for interview, be subject to the scrutiny of your local tax inspector or receive the attentions of a specialist investigator.

And if you try to deny it, you could even face criminal proceedings and end up in jail.

Mr Whiting says: 'If it's a fair cop, then admit it. The worst that should happen is you will be fined 100pc of the tax you should have paid and if you co-operate, it might be less. But you'll have a black mark (whether actual or virtual) against your name, so be careful in the future. If you are being investigated then the onus is on you to prove HMRC wrong, not the other way round,' he adds.

The 'amnesty' for doctors is, according to Mr Warburton, down to a number of things the medical profession may be guilty of.

These could include being given cash for cremation, not declaring income paid in cash from private patients, retainers from commercial organisations and income from locum work.

To see what to do if you are investigated by the taxman, read our guide at thisismoney.co.uk/taxman