OTS: Roll out that big block of cheese
Wendy Bradley has some radical ideas for the OTS to adopt when pushing forward changes to small business tax reporting and payment systems.
You might also be interested in
Replies (2)
Please login or register to join the discussion.
The issue for me is it seems the misnamed OTS, is actually about revenue collection.
They perceive a big loss in revenue in some sectors, but since the tax enquiry system has been largely abandoned for small landlords (other than non-reporting in its entirety, via the let property campaign which in itself seems to have been scaled back) and small business in general, there is no systematic checking being done to ensure small business pay enough tax, so no doubt there is a lot of underreporting of income and faked expenses going through. If people get away with a small items they will keep on coming back with bigger ones.
Rather than simply state the obvious "we need more tax inspectors for existing business" and "we need more investigative units looking for people not in the system" they are looking for technical solutions. A cursory look at Amazon market place ought to be a fertile area for a huge number of VAT and income tax investigations. (There are sellers with thousands of feedbacks apparently trading under the VAT threshold for example. Its blatant.)
The tech solution (which I think is simply not understood by those writing the reports) are then sold to the public as "time saving" and to the HMRC as an easy solution. They seem to be blindsided by the assumption that tax evaders would fall into their trap and use all of this, when in reality if you are operating outside of the system, all you are doing is creating another barrier to come clean by making it very hard to comply for the less tech literate members of society who are probably the very ones doing all the cash in hand jobs.
Once you understand the motivations, the bizarre conclusions on the reports they push out make more sense.
I also think they have a huge issue with 'fake self employed' such as delivery drivers, who would 10-15 years ago all have been on PAYE but HMRC seem to have allowed to be self employed by poor enforcement of existing laws. These workers as they are often earning at around minimum wage are not worth HMRC hitting one by one for a few hundred pounds a go, and often if you did they would be bankrupt to no income for HMRC. So essentially they get tax free cash for little risk. It seems these are the people who they are talking about for self employment, not people with proper businesses. The answer to those issues is not quarterly reporting, but PAYE enforcement.
I really hope this doesn't mean all small businesses, not just landlords, are going to be subjected to a type of tax on turnover, with not all business-related expenses being allowable. I think most people would want to keep personal and business tax separate