Tackling the hidden economy: public sector licensing
The LITRG raises concerns about how tax registration checks would fall short of eliminating hidden economy activity as, for example, the proposals will not affect those who operate illegally without a licence or ensure that those who are registered are actually compliant. Furthermore, there is no proposal on how HMRC (or, indeed, the licensing authorities) assess which tax registrations are relevant depending on the business structure. LITRG also argue that the tax conditionality process should be as streamlined as possible for it to be effective and that while we support the principle of tax conditionality, we have made clear that for this to be successful the Government needs to ensure that it also focuses on improving levels of tax morality in society through education.
The Government has consulted further on the principle of tax conditionality as a means of tackling the hidden economy by requiring those who require licenses to operate to demonstrate they are properly registered for tax.
The latest consultation considers the mechanics of such a proposal in relation to certain public sector licenses, namely those in the private security, taxis and private hire vehicles, waste management, scrap metal, housing and retail sectors.
It is proposed that those individuals and businesses who operate in these sectors will need to provide proof of their registration for tax when it comes to renew their licences. Tax registration will not be checked upon the initial application of the licence, because it is recognised that the licence applicant may, legitimately, have not yet registered for the appropriate tax(es) at that point.
The consultation document can be found on GOV.UK.
The LITRG response can be found here: Tackling the hidden economy: public sector licensing – LITRG response