HMRC sets out proposals to tackle the hidden economy
On 26 August, HMRC published proposals to tackle the hidden economy, promote tax compliance and create a level playing field for UK business. They define the hidden economy as businesses who fail to register for tax, and individuals who fail to declare a source of income that should be taxed.
The consultations published focus on 3 areas:
- Conditionality: by making some government permissions and services conditional on being compliant, HMRC aim to tackle those seeking to avoid their tax (or other) obligations. The condoc states, “It could help HMRC to focus upon sectors where we know that there is a lot of self-employment or subcontracting which would lead to a large amount of self-reporting for tax purposes.”
- Sanctions: this condoc considers what sanctions might be appropriate for failure to notify HMRC of all income, inaccurate tax returns and failing to meet an obligation. Examples cited often include self-employed income not being fully declared, whether through inaccurate self-assessments or no self-assessment covering second income received in addition to being employed and paid via PAYE. It is noteworthy that HMRC is considering the important role that tax agents and other advisors can play in supporting compliance.
- Extending the data-gathering powers to ‘money service businesses’ which are defined as entities which provide money transmission, covering a wide range of business models. The aim is to target hidden economy businesses trading primarily in cash and the proposed power would not require affected businesses to check their customers’ tax position, nor identify cases of tax non-compliance from their own customer data.
Click here to find out more about the consultations >
Published on: 13 September 2016 - By: FCSA
