In her speech yesterday, Chancellor of the Exchequer, Rachel Reeves, outlined the “necessary and urgent work” that must be done to plug a reported £22bn black hole in the public finances.
It was also revealed that HMRC will hire more compliance officers and will be issued greater resources to tackle tax non-compliance.
At the same time, the Chancellor stated that she would hold her first Autumn Budget on 30 October, warning that she would have to make “difficult decisions” to steady the economic ship.
While the Labour Party promised no increases to income tax, national insurance or VAT ahead of the election, she has set an “ominous tone” ahead of the budget, says Qdos, a tax compliance expert for the self-employed.
The Treasury’s public spending audit document stated, “The government is committed to tackling tax non-compliance, including from fraud and tax avoidance, to ensure everyone pays their fair share. The government will increase HMRC’s compliance staff, invest in HMRC’s resources and technology infrastructure, and make legislative changes to tackle tax non-compliance and raise revenue.”
Speaking on the Chancellor’s speech, Qdos CEO, Seb Maley, said, “The Chancellor’s speech has set an ominous tone. The public purse is apparently in worse wear than previously thought. Now you can’t help but think that the scene has been set for tax rises – with the Budget confirmed for 30 October.
“For the self-employed, the first – and maybe most notable detail in the government document – is that more will be done to tackle tax non-compliance. HMRC will be better resourced, more compliance staff will be hired and the tax office’s technology infrastructure will be invested in.
“Throw in the pledged to make legislative changes to tackle non-compliance and it suggests that HMRC under a Labour government will be ramping up its compliance activity.
“One on hand, if by legislative changes the government decides to tackle promoters of tax avoidance schemes – like the disguised remuneration schemes that have plagued the umbrella industry – that would be widely welcomed.
“On the other, granting HMRC more powers to fight non-compliance could present a threat to many taxpayers – if recent years are anything to go by. All too often, we’ve seen innocent freelancers and contractors caught up in long, drawn out and costly tax investigations. While it’s right that everyone pay their fair share, the mistreatment of innocent taxpayers simply has to stop.”
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