Closing the UK tax gap
With an economic black hole to fill, Philip Fisher wonders why the Chancellor isn't getting more aggressive with the tax gap.
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I hate to agree with you Philip, but the most effective way of raising tax would to hire legions of high calibre tax inspectors.
This wins on three counts:
1. Actual savings
2. Fear factor of getting caught (probably *10 of the 1st figure)
3. Weeding out poor accountants (probably *even more )
Right now you can go through your business life with fairly good odds of never having so much as a VAT visit, let alone an proper tax inspection. I don't believe HMRC do any routine compliance checks of small limited companies. We file approx. 100 a year and not had one for over 10 years. We could have done all of them wrong for all I or HMRC know.
Only Humans can make any attempt at spotting the correct accounts to challenge.
Good quality enquiry work would bring fairness and credibility back to the UK tax system
Cheaper than MTD and likely to raise more money
The difficulty is that it is far too easy and cheaper for governments of all colours to raise tax rates or additional administrative burden (MTD) on the honest, rather than apply appropriate man power, using information they already have (Quality enquiry work/Reports to the NCA) or apply appropriate levels of financial controls to those that are making claims (SEISS, Furlough and benefits generally to list a few).
You'll never erase the "tax gap". People will always deal in cash or barter. The thing is that the "tax gap" only happens at the beginning, eventually the money comes into the economy and is therefore taxed (not as many times as the treasury would like maybe). The rich have "clever dicky Accountants and solicitors" to hide their dosh. So let's just take all the admin away from HMRC and let them investigate and collect. No more spending time on IR35, MTD, OTS,WT etc.etc.
Agent strategy should be re-vitalised so that we can do our job and HMRC can do theirs.
Governments never try and address the cause only the symptoms.
It seems that financial crime (and that is what cheating the public purse is) does indeed pay.....