So the big question is: Will VAT be scrapped? Because today’s Daily Insight is all about tax inquiries – three of them to be precise. The first is by the Treasury and it will be into the aformentioned VAT, which, by the Treasury’s own admission, is “notoriously complex and burdensome for business to cope with”.
It will look at Brexit implications, the burden on business, dispute handling and how to improve VAT policy making in general. Oh and the estimated £12.6 billion that the HMRC failed to collect last year. Pretty broad-ranging.
Conservative MP and Treasury committee chair Nicky Morgan says: “The reasons for why VAT is so vulnerable are somewhat opaque, so the committee will examine how this might be addressed.”
Abolish VAT completely
“Brexit may provide both opportunities and challenges to the UK’s approach to VAT. The government may choose to stick to a broadly similar structure to what currently exists, change it, or abolish it completely.” Hang on, did she say abolish it completely? (Yes).
“HMRC collected around £124bn in VAT last year – over a fifth of the UK’s total tax take – and failed to collect around £12.6bn in VAT,” she adds.
“We’ll examine the chief concerns for HMRC and businesses going forward, and what impact Brexit will have on HMRC’s efforts to reduce the VAT element of the tax gap.”
Tax avoidance and evasion
Our other two tax probes will be conducted by the Treasury sub committee. They will look at tax avoidance and evasion, and tax inquiries and disputes.
Labour MP John Mann, chair of the committee, says tax avoidance is of “serious public concern”. “HMRC has been given additional funds in recent years to address the issue, yet the tax gap for avoidance and evasion is still billions of pounds.
“We’ll be pressing those who seek out loopholes to get out of paying tax and the organisations that help them to give answers to Parliament about the revenue that we are all losing out on.”
Is the HMRC acting fairly?
The second inquiry will assess whether tax inquiries and dispute resolution are up to scratch. Simply put, is the HMRC acting fairly in the way it does business? It will also look at “‘sweetheart deals” for large companies.
Mr Mann adds: “The committee often receives representations from people who feel that HMRC’s inquiry process treats them unfairly. Some have accused HMRC of offering more advantageous terms of settlement to big business than small businesses or individual taxpayers receive.”
All inquiries are inviting comments. Get writing everyone!
