Accountants call for better pursuit of tax evaders
With a general election coming next year, it is getting to the time when the three traditional political parties begin to make promises in an effort to capture votes.
For instance, this week has seen the start of the Liberal Democrat conference in Glasgow, which has already played host to business secretary Vince Cable laying into his Conservative coalition colleagues, accusing them of being obsessed with austerity.
However, all the political spending plans announced so far have been queried by those with the financial knowledge required appear to have already picked some rather sizeable holes in them, not least the latest Liberal Democrat plans.
According to the Association of Chartered Certified Accountants (ACCA), some of the numbers that Nick Clegg and his colleagues have projected simply don’t add up.
The upshot is that many of the promises they are making in a bid to once again have a say in government are highly unlikely to ever come to fruition. The ACCA has stated that a huge increase in tax revenue would be the only way to have any hope of achieving these targets – meaning that clamping down on evasion and avoidance is the only option.
Politicians will no doubt be reluctant to introduce any further tax hikes that could threaten votes, leaving a harder line on those who dodge tax as the most pressing concern.
Chas Roy-Chowdhury, head of taxation at ACCA attempted to explain just how big a hole in the economy is created by evasion and avoidance – the former of which is a criminal offence, whereas the latter occurs because of loopholes in the law.
Mr Roy-Chowdhury said: “HMRC itself estimates that £30 billion is lost to the Treasury each year through tax evasion, which is illegal, and through avoidance, which is not but is made possible by complex legislation – the so called tax gap.”
He went on to explain that in order to really clamp down and make it clear to people that evasion will not be tolerated, greater investment would be needed at HMRC. This would mean that more inspectors could be put in place and the organisation would be able to carry out more thorough checks on individuals’ accounts.
Mr Roy-Chowdhury claimed a harder line would “enable it to pursue tax avoidance and evasion more effectively and deal with the intricacies of tax legislation”.
However, there was also a hint from the ACCA that suggested the government may eventually see another increase in VAT – up to to 22.5 per cent – as the most viable option. Although this would essentially be viewed as an ‘easy way out’.
Mr Roy-Chowdhury continued: “It [tax evasion] is an issue which politicians should address in any case as a way of raising more revenue under existing tax rates before they begin to think about raising taxes.”
The issue of tax evasion and avoidance has been a hot topic, not least as politicians have been drawn into commenting on individual cases such as that of comedian Alan Carr.
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