New tax cheat system - will it catch the real criminals?

We've all had that moment when we've looked at a payslip or tax bill and realised just what an enormous sum of cash the taxman is taking from us. We've all wondered whether it's worth working just to line the pockets of the taxman, or whether there is some cunning trick that could reduce the bill. For most of us, that's exactly where the thought ends, as we get back to the grindstone and stay on the straight and narrow.

For others, however, it's how they justify a decision to break the law in order to get around paying their tax bill. A new set of rules from the taxman is set to clamp down on these evaders. But will it work?

New rules for law-breakers
The new rules surround those who are already known to have broken to law in order to avoid tax. This week, 900 former evaders will receive letters explaining that they are now under increased levels of personal scrutiny as part of the new Managing Deliberate Defaulters programme.

It means that they will have their tax affairs monitored particularly closely to make sure it doesn't happen again.

David Gauke, Exchequer Secretary to the Treasury, said: "Managing Deliberate Defaulters will deter people from evading tax in the future and reassure honest taxpayers that tax evaders will be dealt with." HMRC's Steve Hickman, added: "Tax cheat check-ups will involve continued and close scrutiny - it is a real deterrent. If you are thinking about breaking the rules just remember, you could end up with HMRC on your back for five years.

The level and term of monitoring will depend on the seriousness of the offence, but include all sorts of things such as inspection visits, asking for certain records so that they can be checked and requiring that additional information or documents are sent in with the person's tax returns.

They are threatening to step things up. Apparently evaders who fail to keep their tax affairs in order will face increasingly intrusive interventions from HMRC and if deliberate evasion continues, HMRC may also start criminal proceedings. Safeguards are also being put in place to ensure that deliberate defaulters do not escape scrutiny by simply starting up a new business under a different name or identity.

Will it work?
So is Gauke right, do we feel thoroughly reassured?

I'm not so sure. Personally I assumed this sort of thing was going on anyway. If someone has already evaded tax, surely it would be only sensible to keep a close eye on them in future. And surely if someone regularly breaks the law, criminal proceedings should have been part of the deal.

As someone who spends a small fortune in tax, and has done for my entire working life, it comes as absolutely no comfort to learn that tax evaders have been free to set up a business in another name all these years and merrily go about their tax evading business.

Then of course, there's that thin line between tax evasion- which is illegal and is being cracked down on, and tax avoidance - which is perfectly legal and indulged in by plenty of multi-millionaire peers who happily pay a paltry sum of tax while living the high life. How is that possible?

It's almost enough to make you wonder why you bother, and whether you're the last person in Britain playing by the rules.
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