Magazine article Public Finance

R&C Told to Use Higher Fines and Publicity to Deter Tax-Dodgers

Magazine article Public Finance

R&C Told to Use Higher Fines and Publicity to Deter Tax-Dodgers

Article excerpt

Revenue & Customs should impose greater penalties and make more use of publicity to reduce the £1bn a year in unpaid tax lost in the 'hidden economy', the National Audit Office has said.

An NAO report, HM Revenue & Customs: tackling the hidden economy, published on April 3, found that the department had achieved a £4.50 return for every £1 spent tackling the hidden economy in 2006/07. But it said the deterrent effect of prosecutions was reduced by less-than-maximum penalties in successful prosecutions and a lack of publicity for cases.

R&C spends £41m a year tackling the hidden economy, with the report using the term to include unregistered businesses, 'ghosts' ( people who work and pay no tax); 'moonlighters' (people who pay tax on some work but not all); and employers who facilitate ghosts and moonlighters.

Tim Burr, head of the NAO, said R&C had experimented with new ways of encouraging people into the formal economy. 'It could make better use of penalties and secure greater publicity for prosecutions to discourage people,' he said. 'With well over £lbn in unpaid tax each year, it is important that the department becomes more effective in tackling the problem. …

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