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HMRC want to spot tax evasion, but will they be able to?

HMRC want to spot tax evasion, but will they be able to?

Following the release of the Comprehensive Spending Review last week, HMRC has renewed its pledge to crack down on tax evasion to help lower the country’s fiscal deficit.

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The Revenue has been told to cut resource spending by 15%, reduce its capital outlay by 44% and chop 33% off its administration budget, over the next 4 years. The money saved will go towards a £900 million fund that will help the Revenue bring down the number of cases of tax avoidance and evasion.

The government hopes to claw back £7 billion in unpaid tax through the use of better technology and improved IT contracts. These improvements will also help catch benefit cheats who currently defraud more than £5 billion per year from the government.

Under the new clampdown, anyone earning in excess of £150,000 a year is likely to find their tax affairs subject to increased scrutiny.

David Gauke, the exchequer secretary to the Treasury, said that HMRC has a vital role to play in reducing the budget deficit and this can be achieved by refocusing its resources in order to maximise revenues. It is going to become harder for companies and individuals to avoid or evade tax as the Revenue’s resources will focus primarily on prevention and dealing with cases more effectively when a problem does occur.

However, tax experts believe the Revenue will struggle to win the battle against tax evasion, and provide a service to the public, when their budget is being cut.

One of the tax partners at PKF accountants, Philip Fisher, pointed out that the taxman was already struggling to cope after losing several key employees and these new cuts can only make matters worse.

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Image: totally focused, no hocus pocus by Kara Allyson

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