75,000 Brits tip-off the taxman

The number of Brits telling the taxman about people who may be ducking their “fair share” of tax has almost doubled, according to new figures released by HM Revenue & Customs.

Callers to the Tax Evasion Hotline, unveiled in March, have risen from 40,000 in September to the most accurate up-to-date figure of 75,000, HMRC said in a new consultation paper.

Officials seized upon the increase as evidence that many businesses will cooperate with the tax authority when their rivals try to gain “an unfair advantage.”

It is exactly this kind of dialogue between the taxpayer and the authority that the Revenue said it's “keen” to encourage, as part of its bid to ‘deliver a new relationship with business.’

The pledge, which also entitles a paper on how HMRC will ease the burden on enterprise over the next four years, comes on the eve of the imminent pre-Budget Report.

Released last week, it includes a promise by the taxman that “all changes that will have a significant impact on business are subject to full and proper consultation.”

The declaration follows criticism of HMRC from one leading tax expert reflecting on the case of Arctic Systems, who said it makes for a “bad system where one party applies rules as and when it feels like it.”

Moreover, over 100 cross-party MPs recently objected to Lord Carter of Cole’s initial plan to bring forward the income self-assessment deadline for enterprise, absent of any consultation with the business community.

Strong representation of their concerns was made possible by their advisors however, forcing the businessman to withdraw his plan, and admit: “When you don’t get it right, you have to listen.”

A similar tone is now emerging from Revenue & Customs. “In addition to formal consultations, HMRC is keen to ensure that there is an ongoing dialogue with business and its representatives,” the authority said last week.

According to the new proposals, better relations with business will start from day one – in 2011 at least, when newly formed companies will be able to log onto HMRC for a virtual masterclass in compliance.

A pilot of the Web-based scheme will be rolled out in 2008 – the same year that “business will benefit from a greatly improved main self-assessment income tax return,” HMRC claims.

The trumpeted tax return is expected to be half the size it is today, but only for those companies with annual turnover below £40,000, such as so–called ‘lifestyle’ businesses.

Already, 500,000 businesses have benefited from spending less time on their tax affairs, HMRC said, thanks to the roll out of a shorter tax return form for the smallest of ventures.

Over the next four years, a ‘lighter touch’ enforcement regime will be trialed, in keeping with the overall objective of “significantly reducing the administrative burden in dealing with tax.”

This includes the unveiling of a “single customer record,” which the authority claims is “vital,” as it will give businesses an account at the Revenue, which will show all their dealings with HMRC in one place.

Such a move will help businesses, presumably by answering their queries quicker, but it will also instantly expose the tax structure and history of a company, as well as providing officials a “unified view across [all] tax regimes”.

“Joining up between the taxes will mean that information can be shared between the different parts of HMRC,” the Revenue said in its paper ‘Developing a new relationship with business.’

“This will also enable HMRC to carry out more sophisticated risk analysis across the taxes and help target compliance activities on those businesses that do not comply.”

Although some of the reform seems a long way off, a document to be published alongside Wednesday’s PBR will reveal the business community’s first thoughts on aligning filing dates.

Under the plans, companies can choose to file their tax return and their accounts at Companies House in a single online transmission, with UK-wide availability of the facility scheduled for 2010.

Positive developments for start-ups cited in the paper include a dramatic scaling back of the Form 42 compliance rule, and a network of seven R&D tax credit units, which opened on Nov 1, to help innovators with their applications.

Paul Gray, acting Chairman of HMRC, reflected: “We have made real progress in reducing the burdens on SMEs but I recognise we still have a lot to do to deliver the sort of step-change in customer experience that businesses are looking for.

“Today's paper details what we aim to achieve over the next four years to make the new relationship with business a reality.”

In the paper, HMRC said it will provide assistance to those businesses who contact its tax helplines voluntarily.

Officials are following up names reported on its evasion hotline with a risk-assessed assurance programme – a move, HMRC said, that underlines its “commitment to provide a level playing field for business.”


5th December 2006

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