Targeting the hidden economy
The activities of the ‘hidden’ economy are being targeted by HMRC with the establishment of a new Hidden Economy Advisory Group. The hidden economy is a term used to define anyone involved in undeclared economic activity. This covers all types of tax evasion including non-declared VAT, workers being paid cash-in-hand and individuals and businesses who do not declare all their income sources.
The new group is made up with a panel of independent experts who are tasked with seeking new ways to reduce the size and prevalence of the hidden economy in the UK. The group will be chaired by HMRC. HMRC have estimated that the hidden economy could be taking away as much as £3billion from the public purse every year.
The advisory group will examine the following areas:
- The main barriers to someone in the hidden economy joining the formal economy
- Propose workable measures that might be introduced to remove or reduce those barriers
- The motivations and behaviours that lead people to join the hidden economy
- Make recommendations as to what HMRC can do to prevent and stop this problem
The group has been asked to report back "on a Budget 2010 timescale" with an initial assessment of the current situation and proposals for practical and immediate steps that could be taken by HMRC.