New proposals to tackle the UK’s so-called ‘hidden economy’ have been outlined by HM Revenue & Customs (HMRC) in three consultation documents announced late last week.
The news comes after the tax authority said that the hidden economy (or ‘black economy’) is increasingly accounting for substantial economic losses.
According to HMRC, the hidden economy accounted for approximately 18 per cent of the total ‘tax gap’ in the 2013/14 financial year – when losses stood at £6.2billion.
New consultations intend to increase the tax authority’s powers to obtain customer and transaction data from money service businesses (MSBs).
They also seek to impose new requirements for customers to have their tax registration status verified before they can gain access to such services; and to explore the potential to impose new penalties on ‘hidden economy participants’.
The three consultations are titled:
- Tackling the hidden economy: extension of data-gathering powers to money service businesses — which hopes to increase HMRC’s data-gathering powers.
- Tackling the hidden economy: conditionality — which proposes that businesses should be registered for tax in order to access certain business services or licences.
- Tackling the hidden economy: sanctions — which explores the potential for penalties and sanctions to be issued in order to tackle ‘hidden economy participants’.
The three documents, which will run until 21 October 2016, can be found here: https://www.gov.uk/government/collections/proposals-to-tackle-the-hidden-economy.