HMRC says ￡19bn of unpaid tax will not be recovered, Tax credit could address skills shortages, HMRC’s unpaid tax write off points to ‘abject failure’
THE HOT STORY
￡19bn of unpaid tax will not be recovered, HMRC says
HMRC?is owed more than ￡40bn in unpaid?taxes, and analysis suggests that more than ￡19bn of this will not be paid back. The tax office estimates that 45% of the ￡43bn owed in unpaid taxes will not be paid back, compared to 32% the previous year. In its annual report, HMRC said the "prevailing economic conditions" with a "significant impact on businesses and individuals" made collecting the same level of?taxes?more difficult.?Sarah Olney, the Liberal Democrat's Treasury spokeswoman, said the figures reflected "years of Conservative Party economic vandalism" and has called on the Labour government "to properly invest" in HMRC in an effort to "break this cycle of decline." Analysis also shows that?HMRC has lost billions of pounds of taxpayer money to error and fraud in?tax?schemes designed to encourage research and development in business during the pandemic. The report shows that around ￡4.1bn has been wasted on the schemes since 2020, including ￡1.2bn on a support initiative reserved for smaller businesses.
HMRC
HMRC’s unpaid tax write off points to ‘abject failure’
A leading article in The Times looks at an HMRC report which says ￡19bn in unpaid tax is unlikely to be recovered. Data shows that the level of unpaid taxes stood at ￡43bn in the year to March 31 and the newspaper?says the fact that 45% of national tax debt is likely to be written off compared to 32% a year earlier “represents abject failure by HMRC.” The paper says the chances of recovery “are governed not only by external factors such as bankruptcy but by HMRC’s effectiveness as an investigator, chaser and collector.” Noting that both Labour and the Conservatives made pre-election pledges to crack down on avoidance and evasion, it warns that “the body relied upon to do this is simply giving up on billions.” The article says that while the situation is “galling enough for taxpayers who struggle to meet their tax obligations while others dodge theirs . . . more salt is added to the wound by HMRC’s equally abject record on service.”
HMRC issues ‘nudge' letters over crypto tax
Daily Express ? Daily Mail ?
HMRC has started sending 'nudge letters' to Britons suspected of failing to pay the correct tax on their cryptocurrency gains. The letters warn recipients that they may face interest on late payments and penalties if an assessment finds additional tax owed on previously undisclosed crypto gains. HMRC considers the profits or losses from buying and selling exchange tokens as subject to capital gains tax. BDO warns that the letter targets those who have "disposed" of crypto assets, including exchanging one cryptocurrency for another or using cryptocurrency for purchases. HMRC already collects transaction data from crypto platforms and will soon receive it automatically under the Crypto Asset Reporting Framework. Last year, HMRC introduced a specific disclosure process for crypto owners to report any unpaid tax on crypto assets. Paul Falvey, a tax partner at BDO, said: "Many owners of crypto assets may not be fully aware of their obligations and may not have filed a tax return before. They could well get a shock when this letter hits the doormat – but the worst thing they could do is to ignore it."
HMRC issues tax alert over online sales
Sunday Express ?
HMRC has issued a new tax alert targeting those selling goods and services online. The tax office has reminded people buying or making goods to sell at a profit that they might be considered traders and required to pay tax on their earnings. Certain exemptions apply, such as for those making fewer than 30 sales or receiving less than €2,000 from those sales. Online sellers who make significant profits will have to declare them via a self-assessment tax return. The new tax alert follows the UK's adoption of the OECD Model Reporting Rules for Digital Platforms. Rob Rees, divisional director at Markel Direct, a specialist insurer of freelancers and small businesses, advises online sellers to keep a record of all transactions on online platforms to avoid tax return issues.
Data shows ‘extraordinary’ changes in post-Brexit migration system
Daily Mail ?
Data from HMRC shows that while there was a 257,000 increase in employment among UK nationals in Britain between December 2019 to December 2023, there was a 487,900 increase among Indian nationals and 278,700 increase among Nigerian nationals. The data also shows that there were 241,600 fewer employments for EU nationals in the UK in the period. Neil O'Brien MP, a former government minister who requested the data, said the figures show the “extraordinary changes” since the introduction of Britain's new post-Brexit migration system in January 2021. He added that the UK's new migration scheme had been “more restrictive towards EU migration, but much less restrictive towards migration from the rest of the world.”
Robinson's secretive companies have avoided ￡1.6m in taxes
Corporate filings show that prominent far-right figure Tommy Robinson and his associates have created a web of secretive companies that have evaded paying over ￡1.6m in taxes before filing for insolvency.?These entities have failed to file annual accounts and owe ￡328,000 in corporation tax and employer contributions to HMRC. Robinson's associates have triggered a creditors' voluntary liquidation, allowing them to spend or withdraw money from the companies before winding them up. His finances have become more complex since declaring bankruptcy, making it difficult to track his income.
HMRC claims almost ￡400m back from football clubs
City AM ?
HMRC has collected over ￡384m in unpaid taxes from football clubs over the past five years, with analysis from UHY Hacker Young showing that the tax office has recovered ￡67.5m in extra tax from clubs, players and agents in the past year. This is down from the ￡124.8m recovered in the year to March 2023 but up from the ￡58.7m recorded in 2022.
TAX RELIEFS AND INCENTIVES
APA: Tax incentives can drive business investment
The Association of Practising Accountants says business owners are reluctant to invest and warns that this could be further entrenched if tax incentives are withdrawn. In a poll of 500 owner-managers, 65% said they were unlikely or very unlikely to make significant capital investments this year, up from 52% in 2022. Martin Clapson, chairman of the association and managing director of Price Bailey, observes: “The purpose of doing an investment is that you make money on it, you get a return . . . It takes a year, two, three years to get that return. And what will the tax situation be under this government? We keep hearing that taxes need to go up.” Urging ministers to incentivise the private sector, Clapson said: “You are only going to invest if you believe that you are going to get a fair return on that investment. That fair return can either be that there are [tax] reliefs on the investment or that the profit you are going to make from it is not going to be taxed so much that why take the risk with your own money?” Institute for Public Policy Research data shows that the UK has recorded the lowest rate of total investment across G7 economies for 24 of the past 30 years.
领英推荐
Tax credit could address skills shortages, says think-tank
The Times ?
The Inclusive Growth Commission, a business-led think-tank, has called on the Government to introduce a "skills tax credit" to incentivise employers to address skills shortages. The commission found that the UK's human capital stock, which represents the value of workers' skills and knowledge, would be ￡1.8trn higher if it had grown at the pre-2008 financial crisis rate. This shortfall could cost each UK worker an estimated ￡55,000 over their working life since the financial crash. The proposed skills tax credit would allow companies to deduct more than they paid towards training costs through the tax system and offer a credit for loss-making companies. The commission also highlighted that the average investment in training per employee has fallen from ￡2,200 in 2011 to ￡1,800 in 2022.
BUSINESS RATES
Business rates put 17k retailers at risk
Ministers have been warned that more than 17,000 shops are at risk of closure over the next decade unless the government overhauls the business rates regime. In a piece for the Times, Paddy Lillis, general secretary of the Union of Shop, Distributive and Allied Workers, and Sainsbury’s CEO Simon Roberts write: “The No 1 barrier to growth in our industry is the outmoded business rates system.” Warning that successive governments have “promised reform but have only ever tinkered around the edges,” they say this has seen shops close, jobs lost and “economic growth stunted.” Research by Development Economics suggests that a 20% reduction in headline business rates would save retailers ￡1bn in the first year and safeguard or create more than 17,000 jobs. The analysis suggests that if policymakers do not reform the rates regime, 17,300 stores could close by 2033/34 in a worst-case scenario. This could mean the loss of around 42,000 jobs. Office for Budget Responsibility analysis shows that the government is set to collect ￡32.1bn in business rates revenues this year, rising to ￡37.4bn in 2028/29.
VAT
HMRC files winding up petition against Lycamobile
City AM ? The Guardian ?
The tax office has hit mobile network operator Lycamobile with a winding-up petition – a formal legal process used against a company that is unable to pay its debts - over a long-running dispute over VAT worth ￡51m. A tax specialist tribunal last month ruled in favour of HMRC in the VAT dispute, while audit firm PKF Littlejohn said in June that it was unable to sign off Lycamobile’s accounts as it had “not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion.”
Tax break call for listed buildings
Sarah Roller, policy and education manager at Historic Houses, has called for a tax break for historic sites. She argues that the UK’s 370,000 listed buildings make a huge contribution to the country’s culture and economy but warns that “looking after this heritage can be a big — and expensive — challenge.” Until 2012, approved alterations were zero-rated for VAT and Roller is urging ministers to “revisit the VAT question" for repairs on listed buildings.
CAPITAL GAINS TAX
Landlords sell up amid CGT raid fears
The Daily Telegraph ? Daily Express ?
A number of landlords are selling up over fears that the Government is planning a capital gains tax raid that could drive up their bills. Analysis by the Royal Institution of Chartered Surveyors (RICS) shows that the number of new landlords instructing estate agents across the country fell 16% in the three months to July. The RICS report said “yet more legislation” and concerns over an “unfair” tax regime mean that being a buy-to-let investor is increasingly less appealing. It has been suggested that the Chancellor could increase CGT rates to match income tax.
PENSION TAX
Pension tax raid risks hitting retirements, Reeves warned
Dame Amanda Blanc, the chief executive of insurance giant Aviva, has warned Chancellor Rachel Reeves that a tax raid on pensions could disrupt millions of workers’ retirement plans. Her warning comes amid reports that the Treasury is considering cuts to pension tax relief as officials look to plug an alleged ￡22bn black hole in public finances. It has been suggested that there could be a flat rate of tax relief at 30p in the pound, meaning higher-rate payers would face an effective 10% tax charge on their retirement contributions. Dame Amanda said: "If you really want people to save for the long term,?pensions are a long-term game,” arguing that they “are not something that you do something with today and then don’t have consequences in five, 10, 15, 20 years’ time.”
INTERNATIONAL
The low-tax countries wooing the world’s wealthy
The intensifying competition to attract wealthy people using tax sweeteners as well as citizenships or paths to residency means it has never been so easy for the super-rich to relocate.