12:43 25 July 2012
The tax system has been at the forefront of politics this week as the government plans to "name and shame" wealthy tax avoiders and also as cash-in-hand pay for tradesmen has been blasted as "morally wrong" by the Treasury.
Tradesmen have reacted angrily to the accusations. Rated People, a website which collectively advertises the services of plumbers, builders and so on said that in reality if these workers didn't accept cash they would go out of business.
Tariq Dag Khan was quoted by the Telegraph of blasting the Treasury's claims that workers kept their cash bills from the their tax books.
Khan said: “[Treasury Minister] David Gauke’s comments that it is morally wrong to pay tradesmen in cash do little to help tradesmen who are struggling in a difficult economic climate.
"For the reality is that there is little or no alternative to cash payments for many tradesmen, and criticising the whole industry belies a misunderstanding of the situation many customers and tradesmen are in."
Related to this, in a strong attack on tax avoidance, the government is making firm promises to expose those who avoid paying their taxes through loopholes or otherwise.
The aforementioned Treasury minister David Gauke is expected to announce that finance firms will be made to hand over financial details of the clients on their books.
Finance companies will then have to explain their tax avoidance functions.
The news comes after last month's headlines in relation to comedian Jimmy Carr who paid for a luxury home via a complex scheme to which Prime Minister David Cameron branded his Jersey-based scheme as "morally wrong".
The Treasury believe that 14% of all unpaid tax income is due to avoidance schemes and loopholes.
And while these schemes are not illegal, the powers that be are nevertheless hoping to crack down on them as this money could be better used for the economy.
The Treasury minister stated to the BBC that: "These schemes damage our ability to fund public services and provide support to those who need it"
New rules will be established and if broken could face fines upwards of £1m.
A speech to the Policy Exchange think tank revealed by the BBC quoted Gauke: "We are building on the work we have already done to make life difficult for those who artificially and aggressively reduce their tax bill.
"These schemes damage our ability to fund public services and provide support to those who need it. They harm businesses by distorting competition. They damage public confidence.
"And they undermine the actions of the vast majority of taxpayers, who pay more in tax as a consequence of others enjoying a free ride."
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