The Taxman's latest Figures Show £15.7bn Lost Illegally!
Tax evasion is rife in some areas ...
Each year the taxman estimates the 'tax gap'. This is the difference between tax collected and that which, in HMRC's view, should be collected. The total tax gap is around £34bn, of which £5.1bn was lost to criminal attacks, £4.4bn to evasion and £6.2bn to the 'hidden economy', a total of £15.7bn from illegal activity ...
To reduce the tax gap, HMRC have created a number of task forces.
Now let's put this in some perspective - in 2014/15 HMRC collected in £515.3bn ... so £15.7bn is around 3% of the current tax take and also about 1% of UK GDP. In fact, HM Treasury has estimated that the shadow economy (or black economy) would be around 10% of UK GDP!
"This is a lot of money!"
All of which prompts the question, "what is the taxman doing about it?" The answer is actually, quite a lot! The taxman has created specific task forces. Initially launched in 2011, there are now over 30 HMRC taskforces.
They target particular industries or geographical areas - any area that is rife with tax evasion or where the black economy is widespread i.e. landlords, fast-food restaurants and private security firms.
For those of you interested in statistics, by April 2013 the black economy task force had a staff of more than 580, had investigated over 19,300 suspected people and raised more than £160m in tax.
"In 2012/13 alone this task force issued 1,400 penalties for deliberate tax evasion!"
So they are doing their job and the process is working! Those task forces dealing with the fast-food industry has seized the most, raking in over £25million in 2012. In the six months to 2015 the task forces as a whole raised £109m.
Obviously HMRC are also the tax police. It is their job to look after the tax system and make sure everybody is checked up on. Some of these task forces are looking for those businesses that haven't registered with HMRC, some are looking at existing businesses that might not be reporting everything to HMRC.
Are small businesses an easy target for HMRC? We think so! Especially because of its improved IT systems, which can easily target businesses and individuals falling foul of tax laws.
Don't fall foul of HMRC! Make sure you are registered and comply with all of the rules, but if the worst happens and you do get investigated, remember your Chartered Accountant is there to help you.
Until next time ...
If you're worried you don't comply with the current tax legislation or think you're going to get investigated, call me at JVCA on 0333 335 0422 and let's arrange a meeting at my offices in Cranfield to see how I can help.
I've been an accountant in and for business since 1987 and have a wide experience of consultancy, audit, accounts, taxation and wealth planning work from individuals and small businesses to multinational corporations and charities.
My eclectic interests in growing and developing business span a number of areas … and can be summarised as strategic business advice and tax saving advice.
I have worked with the Chamber of Commerce to deliver courses for people about starting up in business and have lectured about tax for a major accountancy practice and for Milton Keynes College.
I relax by reading fiction and by getting away from the office in a campervan.