The other week my wife and I were in
our front garden when a man probably in his fifties came up to us. He
said that about three years ago he had washed and scrubbed the
soffits and fascias on our house and cleaned out the gutters. I
didn't remember him, but my wife did for it was she that had
commissioned him to do this when he had visited previously.
This prospecting soffit cleaner (Let's
call him Stan Soffit) offered to “do” our house again for £140
while pushing a business card into my hand. I pulled a face because
that seemed an excessive hourly rate for the job. The conversation
continued:
Stan “OK, mate, I'll do it for £90
cash”
Me (pulling another face) “Actually,
I am a tax adviser”
Stan “OK mate, no offence.”
(Snatches business card out of my hand) “You won't be needing that
then”
Stan the scrubber then turned and
trotted to his van, and drove to the next turning to turn round as we
live in a cul-de-sac. Coming past again he slowed down and yelled “No
offence mate, eh?” before disappearing without prospecting the
other twenty odd houses in our road.
Actually I was rather offended. People
like him give small businesses a bad name. They are also effectively
taking money out of all our back pockets because if they don't pay
tax on their earnings, everyone else has to pay more.
Dave Hartnett, Permanent Secretary for
Tax (a post he invented himself really) and therefore head of HMRC
believes that the small business population makes up a sizeable
portion of the tax gap and he may well be right. He thinks that
maybe the Chinese idea of a turnover tax would be an effective way of
collecting revenue. Of course this would not catch characters who
never declare their income anyway. Dave must think that everyone is
fiddling their expenses. I think that is a very misguided idea. The
big problem is not with businesses submitting fraudulent expense records with their accounts
and tax returns. It is with those who don't declare some or all their earnings like our friend Stan (well, no friend of mine).
HMRC keeps coming up with plans for
favourable treatment for dentists, plumbers and tutors who have
undeclared income. What they need is some joined up thinking to catch
those working in the black economy who are evading hundreds of
millions of pounds of tax.
Of course it doesn’t make such good
headlines as chasing billionaires and multi-millionaires with their
tax schemes and tax havens. Campaigners such as Tax
Research UK wouldn't get their media interviews out of drive
tarmac cowboys or Stan Soffit. HMRC likes the fat cat headlines too
because it makes them feel legitimate, but they are failing badly at
catching the possibly million-plus small-time tax fiddlers very
likely costing the Exchequer more in lost tax.
A turnover tax would be bonkers anyway.
I guess it would just in effect be an extension of VAT for service
providers maybe with a flat rate, but what about retailers who have
high turnovers but lowish margins? It would all be unworkable, often unfair, and would miss the targets.
Having been in my business a long time
I get a feeling about everyone I meet in business and indeed also in
a private capacity. Darren, our window cleaner, says he will clean
our soffits, fascias and gutters for £90, a figure he quoted without
knowing what Stan had said. I like Darren too. He is happy to take a
cheque; a good sign.
As part of my business I help tax
defaulters, which means those who have not made tax returns or who
have made incorrect tax returns, to come out and pay their dues. For
all those who have either been caught or, as happens quite often, get
a fit of conscience, there are so many below HMRC's radar.
Never mind the fat cats. Let's round up
the rats robbing us in our gutters.
