Tax management: Understanding the Data payment crackdown
As HM Revenue & Customs (HMRC) implements its latest crackdown on tax evasion, we explore some of the detail and help you understand what HMRC will be looking at...
For the first time a crackdown on tax evasion has made information on all credit and debit card payments to UK businesses available to HMRC.
HMRC can access information from the UK’s merchant acquirers – the companies that process card payment transactions – to find out the number and value of transactions completed by a specific trader.
No personal data identifying the card owners or card numbers will be obtained, but this data will be used to ensure that traders have correctly accounted for all taxes due – leveling the playing field for all businesses.
HMRC estimates that this information could reduce fraud by over £50 million per annum.
Tax evasion and the hidden economy cost the taxpayer £9 billion a year. While the majority of traders are honest, they may find themselves undercut by the minority who seek to lower prices by cheating the tax system.
The Government has given HMRC nearly £1 billion to tackle fraud and evasion, and these new powers give HMRC an extra tool to ensure a level playing field between businesses, and also reducing opportunities for those who try and cheat the system.
The legislation allows HMRC to obtain data on card payments to all UK businesses for the previous four years.
HMRC will analyse the data using its sophisticated risking system. This cross-references and compares the data with what the tax authority already holds. The process will allow HMRC to identify fraud and evasion. HMRC has worked closely with international tax authorities – many of which have already had great success in reducing evasion, from access to such data.
Charterhouse works in partnership with its clients to provide cutting edge tax expertise along with complete accountancy services. Located in Beaconsfield and Harrow, and serving clients throughout the UK, Charterhouse writes blog articles to help provide insights and expert advice.