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The taxman is to lead a new initiative to tackle the UK’s black market, which is believed to cost £3 billion in lost taxes each year.
HMRC will oversee the Hidden Economy Advisory Group, a panel of experts in the areas of business and economics. It intends to examine the main barriers to individuals in the hidden economy from joining the formal economy, and recommend workable measures that might be introduced to remove or reduce such barriers.
The group, which will present its initial findings in time for Budget 2010, also aims to examine the motivations and behaviours that lead people to join the hidden economy and make recommendations as to what preventative steps can be taken by the Revenue.
The members of the panel will be:
- Professor John Hasseldine of Nottingham University Business School’s Tax Research Institute.
- Paul Webley, professor of economic psychology, School of Oriental and African Studies.
- Andrew Cave, the Federation of Small Business’s head of policy.
- Aaron Barbour, interim head of linksUK at the charity Community Links.
Representatives from the Department for Work and Pensions and local government will attend meetings as observers.
The chairperson will be Mike Eland, director general of enforcement and compliance at HMRC, who said: ‘We estimate the hidden economy contributes to around 7.5% of the net tax gap, which means we could be losing in the region of £3 billion a year.
‘By understanding the behaviours, attitudes and circumstances of those working in the hidden economy we will be able to identify the right mix of incentives and deterrence to encourage them to move into the formal economy and stay there – even when times are tough,’ added Mr Eland.
1. "It intends to examine the main barriers to individuals in the hidden economy from joining the formal economy" - why the hell do we need another quango? The answer's bleedin' obvious - they don't want to pay the tax.
2. The panel seems short of anybody with any practical experience of dealing with people in the hidden economy (dare I suggest an accountant in practice would have been useful?)
3. HMRC told me before Christmas that the "Hidden Economy" team in Warrington has had to change its name because it is no longer acceptable.
4. "BLACK economy"? Not in this day and age surely?!!
5. £3 billion ............ and the rest.