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The Chancellor is continuing his focus on tax evasion and has set HMRC targets for tax collections. The aim is to ensure that everyone is contributing to the public finances.
A particular concern is the ‘hidden economy’ where people simply ignore the tax system altogether.
Three consultations have been announced to tackle this:
In the meantime, legislation is being introduced to allow HMRC to get data from online intermediaries and electronic payment profits to identify people not declaring all they should to the tax authorities. This helps to protect the interests of legitimate businesses by making sure that they aren’t under cut by those operating in the black market.
The Chancellor is also toughening up penalties for those who are considered ‘serial avoiders’ who make frequent use of tax planning schemes later defeated by HMRC. Anyone caught by the new General Anti-Avoidance Rule could be liable to tax penalties of 60% of the tax charged.
It has been confirmed that the results of a consultation on a targeted rule to tackle concerns about profit extraction from companies will be announced this month. The concern is that people are winding up companies to extract profits as capital rather than income, subject to lower rates of tax. We are expecting the new rule to be introduced by 6 April 2016.
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