There was a time when cash was king, but it seems the Chancellor maybe wants its reign to end for good. HMRC is currently consulting on whether we should abandon cash in favour of paying for goods and services digitally or electronically. Clearly this will make it less easy to cheat the taxman, plus if there’s no cash, then there’s nowhere to hide it. Simple really when you think about it.
Then future remains impossible to predict, but that didn’t stop the Chancellor putting his complete confidence in the Office for Budget Responsibility’s revised predications for the state of the economy. Compared with the Summer Budget four months ago, the public purse is apparently better off to the tune of around £27bn.
It feels more like a happy coincidence than anything else, but there could be even more good luck coming Mr Osborne’s way? Could the result of abandoning cash and moving to electronic forms of payment mean the end of tax evasion?
The British Retail Consortium reports a 10% reduction in cash transactions over the last ten years, and to coincide with the Autumn Statement, HMRC published a consultation paper under the heading ‘Cash, tax evasion and the hidden economy’. We know that this issue has been on HMRC’s radar for some time, and there’s no doubt that using electronic or digital ways of paying for goods and services will make it less easy to cheat the taxman. There’s no skirting around the issue by HMRC, who are coming straight in with questions such as “What evidence is available about the use of cash to conceal transactions within the hidden economy?” Perhaps they are expecting the public to report violin cases full of used bank notes they see lying in dark corners?
The recently released Tax Gap figures include £6.2bn for the hidden economy and £4.4bn for evasion, so much higher than tax avoidance which comes in at £2.7bn. It almost goes without saying that the fresh crackdown on tax avoidance announced during the Chancellor’s speech was inevitable, but perhaps if we are all giving up cash anyway, there will be nothing left to hide?
Mattress retailers – you have been warned…