George Bull, a senior tax partner at tax and consulting firm RSM, said: “To maximise tax revenues and bring erstwhile evaders into the tax system for the future, we urge the [UK] chancellor and HMRC to embark on a concerted attack on tax evasion, starting with one final ‘amnesty’ for tax evaders who are thinking about coming clean to HMRC.”
He contrasted the amount of revenue which would be generated by this year’s Spring Budget now aborted plans to increase the self-employed class 4 national insurance contributions with the potential figure that could be obtained from carefully targeted new anti-tax evasion measures.
“The amount of extra revenue generated by this manifesto-pledge breaking measure is a net £145m (€166m, $177m) a year, a mere drop in the ocean compared to the total tax gap of £36bn which includes £5.2bn lost to evasion and £6.2bn to the hidden economy.”
Legal tax avoidance crackdown
Bull said HMRC had shown what it’s capable of by successfully cracking down on legal tax avoidance in a sustained attack which had lasted many years.
“We believe that the time has now come for HMRC to repeat that success by tackling tax evasion.”
Most of the tax evasion moves by the UK tax authority had been in the form of a series of disclosure facilities such as the now defunct Liechtenstein Disclosure Facility, he said.
“We recognise that life is about to get more expensive for tax evaders who are caught by HMRC. Following the introduction of the Common Reporting Standard, under which more than 100 jurisdictions have signed up to the sharing of financial information, the imminent ‘Requirement To Correct’ legislation is an initiative which is more ‘stick’ than ‘carrot’.
“Those who ‘fail to correct’ by 30 September 2018 will be subjected to a range of stringent financial penalties and run the risk of being named and shamed. But will these new measures really have the desired effect of getting tax evaders to come forward and settle? Undoubtedly some will, but not to the tune of £11.4bn.”
