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UK Announces Tax Evasion Crackdown


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Dec 29, 2008
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Danny Alexander, Chief Secretary to the UK Treasury, has announced that the coalition government will embark on a major crackdown against tax evasion and avoidance with a view to raising an additional GBP7bn in revenues by 2014/15.

Announcing the initiative at the Liberal Democrat Party Autumn Conference on Sunday, Alexander said that an additional GBP900m will be set aside for HM Revenue and Customs (HMRC) to attack tax evasion on four fronts, with an emphasis on wealthy individuals and business people.
"We will be ruthless with those often wealthy people and businesses who think they can treat paying tax as an optional extra," he said.

HMRC will use the extra funding for a "more robust" criminal deterrent against tax evasion, the creation of a dedicated new team within the tax department to investigate offshore tax evasion, the formation of a specialist cyber crimes unit, and investment in new technology to detect alcohol and tobacco smuggling.

Alexander said that in today's economic climate, and with the government attempting to close the GBP165bn budget deficit, tax avoidance and evasion "is morally indefensible."

"This will mean a crackdown on those hiding money offshore; a fivefold increase in prosecutions against those who evade tax; and rooting out 50p rate tax dodgers," he announced.

The initiative was welcomed by John Whting, Tax Policy Director at the Chartered Institute of Taxation, but he warned that more complex rules "risk becoming administratively burdensome for all concerned and even creating further loopholes."

Whiting noted that
"a good deal of the supposed avoidance is dependent on obfuscation and concealment."

The crackdown was announced shortly after HMRC revealed figures showing that the 'tax gap' between taxes legally owed and actually collected had grown to GBP42bn in the last financial year, GBP2bn higher than the estimate for 2008/09.

According to the figures, the largest shortfall was in value-added tax, where GBP15.2bn went uncollected. Almost GBP6bn went uncollected as a result of inaccurate self-assessment tax returns, representing the next largest loss to the Treasury.


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