Report by National Audit OfficeThe report reviews the working of the self assessment system introduced by the Inland Revenue five years ago. Although recognizing recent changes to the Revenue’s approach to intelligence work, the report expresses concern at the tax that is not collected. It is difficult to estimate the size of the hidden economy and the tax gap, but in 1999/00 some 22 million pounds additional tax was collected. Most of this came from ‘ghosts’ who are self employed people or businesses not registered for tax and moonlighters who are registered for tax as an employee but also work on the side, without declaring the income. The lack of targets for collecting tax from the hidden economy was also criticized. Measures taken to reduce the tax loss include setting up specialist teams to improve the focus of the work and increasing the scope and scale of data-matching to identify non-compliance.
Report available from the NAO. www.nao.gov.uk. Hard copies can be obtained from The Stationery Office on 0845 702 347