HMRC has opened three new consultations on proposals intended to ‘tackle the hidden economy, promote tax compliance and create a level playing field for UK business.’
Tackling Tax Non-Compliance
One proposal discusses an extension of HMRC’s bulk data-gathering powers and how they might be implemented. HMRC want to gather customer data held by money service businesses (MSBs). HMRC say the data will help them ‘identify non-compliant customers trading in the hidden economy.’ These customers are ‘non-compliant’ because they hide undeclared income.
HMRC says this proposal will help them address the exploitation of MSBs by non-compliant customers and minimise the compliance burdens on MSBs.
Levelling the Playing Field
Another consultation revolves around a proposal that ‘access to some business services or licences should be dependent on businesses being registered for tax.’
HMRC says this ‘conditionality’ proposal could help to make it ‘as easy as possible’ to register for tax, while making it as difficult as possible for non-compliant businesses to evade their tax responsibilities.
Although the consultation doesn’t include definite measures, it does seek views on the conditionality principle and the ways in which it could be used to improve tax compliance – views which will be used to inform HMRC’s policies in this area in the future.
“Hidden economic activity… disadvantages compliant businesses,” states Jane Ellison, Financial Secretary to the Treasury, in her foreword. “Competition between businesses is distorted when a small minority seek to hide under the radar from their tax obligations.”
She says this proposal will help “the majority of UK businesses by levelling the playing field between compliant and non-compliant businesses.”
Tackling the Hidden Economy
The final consultation discusses the potential new penalties and sanctions that could be put into place to tackle those ‘operating in the hidden economy,’ not just first-time offenders, but also for repeat offenders – those HMRC customers who have already been penalised for non-compliance but continue to evade their tax responsibilities.
The proposal includes options for new sanctions and seeks suggestions on how new sanctions can be ‘designed fairly and effectively to deter hidden economy activity.’
“Our message to those operating in the hidden economy is clear – it is getting harder to hide your activities,” says Jane Ellison. “Come forward before HMRC catches up with you and join the vast majority of businesses that pay their fair share of tax.”
HMRC wants opinions from a wide variety of people and sectors, so if you’re a compliant taxpayer who feels strongly about those who evade their tax responsibilities and raise your tax bill, why not have your say? You have until 21st October to read the proposals and share your views by email to isbc.compliancepolicy@hmrc.gsi.gov.uk.
