HMRC is launching a crackdown on taxi drivers, mini cab drivers and scrap metal merchants from April, with the introduction of new tax evasion checks, City A.M. has been told.
The introduction of a number of new tax evasion checks will allow HMRC to further scrutinise workers in what it sees as ‘high risk’ sectors for tax evasion due to the prevalence of cash-in-hand work or widespread use of cash, accountants at UHY Hacker Young said today.
From April 4, taxi drivers, minicab drivers and scrap metal merchants will have to confirm to HMRC that they pay their taxes in full in order to renew their licences from local licensing authorities.
If they have underpaid tax and lie to HMRC about it, they open themselves up not only to their licences to operate being lost but also to potential criminal prosecution.
The new HMRC “tactic of threatening the livelihoods of those in certain trades is a major change in how tax compliance is enforced in the UK,” said Phil Kinzett-Evans, Partner at UHY Hacker Young.
“HMRC will be able to block licenses being issued to people who have underpaid tax or who fail to complete the tax check.”Phil Kinzett-Evans, Partner at UHY Hacker Young.
HMRC projects that the new system will prevent £270m of tax evasion over the next five years.
Kinzett-Evans continued: “HMRC has collected a whole host of new powers over the last decade but the power to threaten people’s jobs is one of the most fearsome.”
“This is a major new step in how HMRC enforces tax compliance. Stopping people being able to work is a step that the tax authority should not take lightly,” he concluded.
When approached by City A.M. today, a HMRC spokesperson said the new policy is about “creating a level playing field for the compliant majority in these sectors, so the majority who play by the rules won’t be disadvantaged by the minority who do not.”
“We know that people who are operating in the hidden economy may not be doing so deliberately, many people do so because they are unaware of or unsure about their tax obligations,” he said, calling the new policy “an innovative, cost effective and simple way to tackle this part of the tax gap, preventing people entering the hidden economy.”
“We’re working with industry bodies to make this as straightforward as possible. The check should take a few minutes every few years and is simply about confirming whether someone is registered for tax or not,” he added.
“If the licence applicant is already registered with HMRC if they need to be, this will be a straightforward online check, taking a few minutes, typically once every three years,” the spokesperson explained.