TaxMar 13 2019

HMRC blames carelessness for unpaid tax

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HMRC blames carelessness for unpaid tax

HM Revenue & Customs said carelessness was the single biggest reason for people failing to pay their taxes.

The tax office has published its strategic approach to tackling tax evasion, avoidance and other forms of non-compliance following today's Spring Statement.

In the paper HMRC said its Making Tax Digital programme would help address errors or issues of carelessness.

HMRC said: "In most cases, these individuals and businesses, the government, and HMRC are all trying to achieve the same goal: to get their tax right.

"Because the most common problems HMRC finds with these taxpayers are errors and carelessness, HMRC’s focus is to help make and keep tax compliance as straightforward as possible.

"The digital transformation of the tax system, including the changes to Making Tax Digital described earlier, helps achieve this," it stated.

HMRC said "failure to take reasonable care" accounted for £5.9bn of the UK's £33bn tax gap - the single biggest proportion, with evasion accounting for £5.3bn.

Once the Making Tax Digital programme is complete, HMRC is predicting it would receive an extra £1.2bn in additional tax because of reduced errors.

HMRC stated it would tailor its approach depending on the type and size of the taxpayer or business it was dealing with.

One of the segments it highlighted was wealthy individuals, and HMRC said it uses a range of approaches to ensure wealthy taxpayers pay the right tax, with dedicated teams looking at the financial affairs, behaviours, and compliance risks of wealthy taxpayers.

It stated: "This is supported by strong data and intelligence-led activity to identify risks in the wider wealthy population.

"HMRC will take direct action against those who deliberately get it wrong, collecting tax up-front from avoidance schemes, and litigating disputes over the tax due.

"In 2017-18, across all HMRC activities, investigations into the wealthy secured additional tax revenues of over £1bn."

Wealthy individuals only account for £3.4bn of the UK's tax gap, which is the difference between the amount of tax which should be paid and what is actually paid.

Small businesses accounted for the largest single source of the tax gap, at £13.7bn.

damian.fantato@ft.com