The hidden economy: HMRC nil points

@Confucius:
Make self interest the way to reduce tax avoidance, rather than fear of detection

Surely no-one is frightened of having tax avoidance detected ?

by only giving tax relief for expenditure where a proper invoice is given.

If that sounds simplistic, it already applies for VAT, so the principle could be widened.
Why not give tax relief for home repairs , but only where the provider gives a valid invoice, perhaps including his UTR?[this applied some years ago in Eire].

If it applies only say for the next 2 years, it will help the recessionary problem without any tax cost at all.

Make self interest the way to reduce tax avoidance, rather than fear of detection

This report makes very interesting reading for those currently commenting on or training on the new HMRC compliance regime.

First, I think that the new penalty system for inaccuracies on returns will answer the criticism of penalties for tax fraud. The new penalties for deliberate understatement are a shocking 70% or 100% of the tax understated, with the only opportunity to reduce these being full disclosure - before HMRC start asking questions. That delivers quite a different message to the old notional 100% but in realtiy a "deal" that comes out around the 25% mark.

Second, those who have been crying "foul" at the new compliance powers in the Finance Act 2008 have had the ground largely cut out from under them by a report which says that HMRC are not doing anything like enough to secure the tax base. Of course the real issue is whether HMRC will properly target the use of these new powers at the fraudulent rather than using them against easy targets who are largely honest.

Finally, in my view this is a huge education issue. Until kids in school learn that by defrauding tax they are stealing from their mums, dads and grandparents, and every honest taxpayer who by consequence bears an additional tax burden then fiddling tax will continue to be socially acceptable. Stealing from the taxman is not that at all, it is stealing from those in hospital and our kids in school. If that message could be driven home then things might get better.

Oh, and complexity and rates of tax and so on as excuses are just that. If you don't like the things that Government do then vote for someone else or stand yourself. Just don't steal from my elderly father.

To be found Presumably, among the 57 barristers.

@Gerard:
Maybe you should move in less-insalubrious circles ...

I don't know anyone in self employment who ISN'T doing some work in the hidden economy - it's endemic and will get worse. Our glorious leader failed to take that into account when he increased the complexity of the system while reducing the ability of HMRC to deal with it. I give up these days even trying to advise my clients that "it's not worth it"
Clearly it is.
Even the ones that get caught for £250k evasion get a year (so far) to continue not paying PAYE, VAT, Income tax.......