Does everyone pay their fair share?
Relax! I’m not going to talk about Apple (or Amazon or Google or [insert your “favourite” low tax paying multinational here]).
This week I am looking closer to home. We suffer from a “hidden economy” which is shorthand for saying that there are loads of people out there carrying on in business and not telling HMRC about it. In other words they are cheating all of us who grit our teeth and pay the taxes that are due from us. As it is hidden it is difficult to be precise about the size of the hidden economy but HMRC estimates that over £34bn a year of tax is missing and over £6bn of that arises because of the hidden economy.
HMRC are constantly trying to find new ways of closing the “tax gap” and they have, in the past week, issued some proposals for consultation. Among their ideas are:
• To make “Money Service Businesses” (businesses providing money transmission, cheque cashing and currency exchange services) provide full details of their customers and their transactions. They have already made credit card services companies provide similar information, so we can only assume that HMRC have found that “following the money” works!
• Making the issue of licences, permits and other business services conditional upon being registered with HMRC.
• HMRC statistics suggest that businesses in the hidden economy accept penalties as a cost of doing business so they are exploring ways of making the penalties bite harder.
A final note, our missing £34bn is eye watering but it is one of the smallest tax gaps in the world!
AIMS Accountants for Business, if you like the way we think, you will like the way we work. See www.aims.co.uk for more.