I read recently a report from HMRC that noted with surprise that the receipts from tax revenues were 20% down from those expected.
Last month the widow of a client of mine called me to tell me that the solicitors dealing with her late husband's estate had been forced to close as it could not remain profitable. This was the second legal practice I have come across recently that has had to close.
Now perhaps the fact that the HMRC's expected income is 20% down is because it is harder than ever to make profits, and lower profits pay lower taxes. It may well raise more revenue from these targeted sectors, some, the restaurants, the grocers and the hair and beauty sectors will have a significant amount of income in cash, and will probably end up paying tax to close the enquiry, but sometimes at the cost of the business itself.
It reminds me of my poor clients in south London who are having their funding cut to a point that makes the practice unviable (less than £60,000 profits for the full time partners) and the PCT chief exec explaining that if the practice can't afford to service the patients they should be send to A&E. I kid you not.
There is a lot of bluster when it comes to tax, government ministers preach about everyone paying their fair share, and the immorality of tax avoidance, but it was only a year ago or so that HMRC appeared to do a deal with Vodafone and let it off a tax bill of around £6bn. I make that 307.69 times the amount of tax that HMRC is attempting to collect with this latest challenge.
It not what you call joined up thinking is it?
What about accountants? I hear you asking.........apparently we are next!