Paying cash in hand is ‘diddling’ the economy and depriving schools and hospitals of money, the country’s top taxman said last night.
Dave Hartnett, permanent secretary for tax at HM Revenue and Customs, called on people to report those they believed were evading tax.
He said paying a builder or cleaner in cash, allowing them to evade VAT or income tax, would result in even deeper Government cuts to public services.
Taxman: Paying cash in hand is 'diddling' the economy and depriving schools and hospitals of money
Those who contribute to the black economy cannot then complain about austerity measures, he added.
HMRC has come in for stinging criticism in recent weeks for alleged ‘sweetheart’ deals with big firms such as Vodafone, allowing them to avoid paying millions of pounds in tax. But Mr Hartnett denied the charge.
He added: ‘Tax provides the funding to run the country: hospitals, schools and everything else. Every time someone pays cash in order not to pay VAT, the nation gets diddled.’
He said there would be a crackdown on the very rich who do not pay their fair share, with loopholes used by such people closed.
And he encouraged anyone who suspects wrongdoing to telephone the Revenue’s whistle-blower hotline and tip off inspectors.
‘Cash has been a problem for a long time. The people who are worried about it should use our whistle-blowing line to tell us,’ he said. ‘We are getting better and better at finding people who receive cash.
The HMRC says those who contribute to the black economy by not paying tax cannot then complain about austerity measures
‘There are loopholes for wealthy people which have got to be closed down. We have not yet got the same head of steam up, addressing those loopholes as we have with business loopholes, but we will be there soon.’
He said HMRC aimed to increase its number of prosecutions for wilful non-payment six-fold, to 1,200 next year.
MPs last month accused Mr Hartnett of being ‘unduly cosy’ with big companies and of applying double standards to corporations and ordinary taxpayers.
It was alleged he agreed deals with companies including Goldman Sachs and Vodafone that allegedly let them off large bills worth millions of pounds. But Mr Hartnett claimed the Revenue’s ‘engagement policy’ with businesses had persuaded them to pay £25 billion in tax over the past six years which they otherwise would not have done.
‘We are not soft with big business; there was no sweetheart deal with Vodafone,’ he said. ‘We got all the money for the nation that was there to be got.’
He said the controversy has unfairly damaged the image of HMRC. ‘It has also done a huge disservice to the country. My own people are now more wary about how they engage with large corporate taxpayers, and large corporate taxpayers don’t want to end up on your front page,’ he said.
Mr Hartnett said there was once a culture in large companies for tax avoidance which is now widespread among well-heeled individuals.
HMRC is starting a campaign to target tens of thousands of cash-in-hand builders and other prosperous people who used to pay tax at the top rate but have now stopped.
Previous operations have homed in on home tutors, plumbers and eBay traders, and have pulled in an extra £500million in tax since 2007.
Mr Hartnett, who is retiring this summer after 36 years at the department, denied he had been forced to retire and said he had been getting ‘a lot of offers’ of work.
Blog : Everything For Money
Post : Paying cash-in-hand 'is cheating the country' says nation's top taxman
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