The Chartered Institute of Taxation (CIOT) has welcomed today’s announcement by HM Revenue and Customs (HMRC) to consult on a number of forthcoming campaigns against tax evasion in particular areas.
New campaigns targeting VAT defaulters, private tutors and e-marketplaces are to be launched by HMRC over the next year. There will also be another ‘trade’ campaign, building on HMRC’s plumbers’ campaign.
Gary Ashford, who represents the CIOT on the Compliance Reform Forum, commented:
“It is welcome that HMRC have said they are going to consult externally before launching these campaigns. This will hopefully make for well-designed projects.
“These targeted campaigns come as no surprise, given the Government’s high profile target of bringing in an extra £7 billion through initiatives to tackle tax avoidance, evasion and fraud by the end of the Parliament. The news last week1 that HMRC have launched 16 criminal investigations off the back of earlier campaigns shows that the taxman is taking a very tough line against suspected tax evaders.
“It will be important for HMRC to explain to e-traders the borderline between an individual selling one’s own surplus belongings and moving into trading. It is important to understand the ‘badges of trade’. Individuals who think they might be trading should consider seeking advice from a tax adviser.
“On the campaign against VAT evasion, we are concerned that HMRC have indicated that they consider traders with reported income continually just under the VAT threshold are likely to be evading tax. Clearly those who are evading tax need to be tackled, but some businesses deliberately keep below the threshold to legitimately avoid being VAT registered, as it can significantly increase their real selling prices and reduce profits where a business sells to individuals and can be very bureaucratic.
“HMRC have a range of sources of evidence available to them and we assume that they have been doing their homework so they can target their anti-evasion efforts. Careful targeting is needed as the one fear with this initiative is that those who make genuine mistakes over their tax affairs might be caught up in this drive. Such people need help, either from HMRC or from properly-qualified tax advisers.”
Notes to Editors
- At a meeting of HMRC’s Compliance Reform Forum last week HMRC revealed that criminal investigations are now ongoing in relation to two of their ‘disclosure opportunities’. There are ten criminal investigations underway in relation to the New Disclosure Opportunity (for people with undeclared tax liabilities relating to offshore bank accounts) and six in relation to the Tax Health Plan (for doctors and other medical professionals). Note that a criminal investigation does not mean prosecution at this point. It is ultimately the CPS who decide on whether or not a prosecution goes forward.