Lie detectors: The new weapon against tax avoidance

£7 billion.

That is the estimated figure that tax avoidance costs HMRC every year.  And now, new proposals announced at the Liberal Democrat conference and reported in the Daily Telegraph will aim to crack down on people who ‘think they can treat paying tax as an optional extra’.

The announcement comes after a successful pilot amnesty aimed at high earners in the medical profession.  This initiative led to one doctor handing over £1 million in unpaid taxes, and a dentist owning up to a £300,000 bill.  Similar campaigns will be aimed at other high-earning taxpayers, such as those in the legal profession, architecture and elite sportspeople.

The use of debt collection agencies

HMRC will work alongside private debt collection companies in a new drive to challenge the tax records of 150,000 people earning more than the threshold for the highest income tax bracket (£150,000).

The HMRC are planning to use:

  • ‘voice recognition analysis’ – a system that alerts investigators when a caller sounds nervous
  • A dedicated team to catch people with money stashed in foreign banks
  • lie detector tests

Whilst private companies do not possess the same level of powers as Government agencies, pilot schemes have shown that these agencies were far more successful at clawing back money than HMRC employees.  HMRC estimates that the annual number of prosecutions for tax avoidance will rise fivefold, bringing in an additional £7 billion a year.

Politically motivated?

This new drive against tax avoidance, evasion and fraud was announced on the first full day of the Liberal Democrat Conference.  Many people have accused the Lib Dems of allowing the poorer parts of society to accept the Government’s spending cuts and so this new announcement is an attempt by the party to reiterate that they expect higher earners to pay their fair share of taxes.

Party leader Nick Clegg will argue that his party, unlike Labour, will tackle both welfare cheats and tax cheats.

In his party conference speech, Danny Alexander, the Chief Secretary to the Treasury, said: “There are some people who seem to believe that not paying their fair share of tax is a lifestyle choice that is socially acceptable. It is not.

“Decisions we make in the spending review will ensure the taxman has the resources to be ruthless with those often wealthy people and businesses who think they can treat paying tax as an optional extra.”

Leave a Reply