Hot on the heels of H M Revenue & Customs (HMRC) going to the extraordinary lengths of advertising on billboards and the back of buses see our previous blog article here, the Inland Revenue have confirmed they are setting up a “crack team” of tax inspectors to review what people are spending.
Using data from credit rating agencies, the new team is tasked with reviewing taxpayers’ spending habits and comparing with declared income for taxation purposes, this initiative will encompass about 2 million people and follows a successful pilot covering 20,000 taxpayers earlier this year.
People will then be identified and anyone classified as ‘high’ or ‘medium’ risk will have their affairs more closely scrutinised by HMRC in a move anticipated to generate more than £10 million in additional taxation.
This is just the latest in a series of initiatives launched by the government to bolster the country’s coffers and reduce the budget deficit but is thought to be the first time that external agencies have been used by HMRC to such a large scale and comes on the same day that the Treasury announced an additional £77 million in funding to HMRC to take on 100 extra staff in their “affluent unit” which targets the wealthy.
It’s clear that the government are almost giving HMRC a blank cheque when it comes to tackling tax evasion and even legitimate taxation planning is increasingly coming under the spotlight. Perhaps the time is getting closer for a vastly simplified taxation system and maybe even a ‘flat rate of tax’ that can be understood by all? However, this is a politically sensitive subject and one we will address in a future blog.
If you have any concerns about taxation, tax planning or if you may have miss declared income, please contact our expert taxation team at your local Burgis & Bullock office on 0845 1775500 or using the online contact form.