Chancellor creates tax 'imbalances' to achieve £5bn tax savings
16th July 2015 | News
Chancellor, George Osborne has been accused of moving the tax goalposts at the Summer Budget 2015, creating a host of tax “imbalances” to ensure his pledge of £5 billion in tax savings can be met.
The Chancellor appears to have remembered that the Conservatives promised in their general election mandate to raise “at least” £5 billion from tackling tax non-compliance, such as ‘aggressive’ avoidance.
According to ContractorUK, Mr Osborne has added the new area of “total imbalances in the tax system” to the existing category of ‘avoidance, tax planning, evasion and compliance,’ to guarantee that his savings target can be met.
The area is described as “where [tax] support disproportionately benefits certain groups or types of business structure”, with these imbalances expected to recoup almost £2.5 billion singlehandedly in 2020-21.
The Summer Budget 2015 includes six tax imbalances, including the Employment Allowance, which is being axed for single-person firms, and Tax Motivated Incorporating, which will be reduced due to the dividend tax hike.
Contractors will no doubt be affected by both of the above, despite the Budget insisting that the addressing of such imbalances in the UK tax system is necessary “in order to pay for tax reforms to support individuals and businesses”.
Other losers from the Chancellor’s plan to target tax imbalances include renewable energy producers, ‘non-doms’ and asset purchasers which, according to the Treasury, have “developed over time”.
The Budget handed HM Revenue and Customs (HMRC) an additional £60 million of funding by 2020 in a bid to enable the tax authority to treble its criminal investigations, with a goal of pursuing 100 prosecutions a year by 2020 and a focus on wealthy individuals and corporates.
Funds will also be given to acquire data from online intermediaries and electronic payment providers, so it can find people who operate in the ‘hidden economy’.
“We will invest in new HMRC investigators from 2016 to exploit this data,” the Budget states.
“The Government will also create a digital disclosure channel which makes it simple for taxpayers to disclose unpaid tax liabilities.”
According to the Treasury, HMRC will recoup £9 for every £1 invested under its £800 million investment plan, which includes £300 million to tackle non-compliant SMEs.