Pressure is mounting to tackle tax evasion, a Kirklees accountant has warned.
Nigel Westman, partner at Clough & Company in Cleckheaton, said that with tax dodgers allegedly costing the UK economy more than £80bn every year, HM Revenue & Customs was under growing pressure to significantly increase the number of tax investigations it carries out.
Figures from the civil servants’ Public and Commercial Services (PCS) union reveal that tax evasion increased to £82bn last year and the organisation warned that it could rise to £100bn by 2018/19.
Cash traders operating in the shadow economy owed about half of this and the rest was due to unpaid tax debt and people minimising tax within the law through so-called tax avoidance schemes.
Mr Westman said: “Tax evasion is already a major issue and with a general election looming, these latest figures have reignited the debate about how to tackle the problem.
“There appears to be a broad consensus that those who make up the cash economy have free-reign to evade VAT, income tax, corporation tax and National Insurance.
“This is compounded by a separate report published earlier this year that reveals in 2011/12, up to 10% of UK sales income went unrecorded, which was estimated to represent £100bn worth of trade in the shadow economy. This could have resulted in a loss of up to £40bn for HMRC.
“When you look at these figures, it’s clear that tax evasion is actually a much bigger issue than tax avoidance and tackling the problem could help the Government make substantial inroads into the budget deficit.
“As a result, HMRC is under growing pressure to better police the tax system and significantly increase the number of tax investigations it carries out. This would also help to increase the number of routine anecdotes being circulated about people being caught and punished for tax evasion which would be a major deterrent for many.”
Mr Westman said: “Any crackdown will most likely target small businesses and the self-employed because tax evasion is most prevalent in these sectors of the business community and they are often less likely to use a professionally qualified accountant or tax advisor to ensure their affairs are in order.”