Director Martin Wardle talks about how HMRC are starting to join the dots to uncover our hidden economy.

HMRC are busy consulting on proposals that they hope will help to attack the hidden economy.

They have realised that for too long government has often been fully aware of certain activities but the separate departments simply do not speak to each other.

For instance in the North East some landlords have to register with the local authorities to let their property out. Gateshead Council know those landlords letting houses in Swalwell for instance due to selective licensing but HMRC do not have access to that very same list of landlords.

What are they up to now?

In a bid to bridge the knowledge gap HMRC are aiming to make it impossible to obtain the licence needed without proving that you are declaring the income received to HMRC.

The National Landlords Association covered this quite well for landlords here https://www.landlords.org.uk/news-campaigns/news/hmrc-consult-on-adding-tax-compliance-checks-landlord-licensing so I will not cover it any more here.

If you’ve seen me speak, pretty much ever, to a group of landlords I have long warned that HMRC are starting to use data more smartly. This is a step closer to them joining the dots. So what if you don’t have any property? Do you need to worry about this?

What Next?

It isn’t hard to imagine how this technique could be extended if successful.

A search of your local council website under “licences” will give dozens of results for various things you need to have a licence for. From tattoo artist to taxi driver, dog breeder to doorman you will need a licence. Whether HMRC will do this will depend on the success of this foray in to landlords. As the work will largely be done by other government bodies it’s hard to see how it will not be extended.

Will it actually work then?

Of course the main issue with this is that those that are determined to buck the system they won’t normally apply for a licence in the first place. That said they are already systems in place to ensure that they do. For instance if you want to receive housing benefit for a house in a licensed area you will need to have a licence first. So operating without a licence will normally mean a limited existence.

If you’d like to put your two pennies in to the consultation you can do so here any time up to 2nd March 2018 – https://www.gov.uk/government/consultations/tackling-the-hidden-economy-public-sector-licensing

As always for more information give me a call on 0191 281 8191 or email me: mwardle@robson-laidler.co.uk