The government announced in 2000 that 400 more “fraud-busters” are to be employed to tackle the hidden economy.
These new investigators will be targeting employers to check on whether they are meeting their tax and VAT liabilities, and whether they are helping employees cheat the benefits system.
This step is one of several intended to tackle the hidden economy. Lord Grabiner QC made 17 recommendations to the government, most of which the government is implementing. Other steps include:
- requiring the unemployed to sign on at different times at short notice to deter those claiming jobseekers allowance while working;
- a confidential helpline to give anonymous help to those who wish to go straight. It should be appreciated that there is no amnesty for those who use this service;
- a new statutory offence of fraudulently evading income tax, which can be heard in the magistrates’ court;
- imposing additional requirements on benefit claimants, particularly with regard to identity and national insurance numbers;
- adopting a US-style “two strikes and you’re out” so that anyone convicted of benefit fraud twice loses benefit for a defined period;
- introducing reverse searches using the telephone directory to catch “cash in hand” tax evaders. Customs and Excise already have this power; Inland Revenue is to be given it;
- various measures to help those who become self-employed;
- greater publicity on how to stay legal, and the penalties of not being legal.
The government is already undertaking a successful crackdown on the clothing and fashion industry. Inland Revenue, Customs and Excise and six other agencies and government departments have co-operated in “joined-up government”. In nine months, they have recovered over £1 million in tax, stopped £107,000 a week in benefit payments, and deported six illegal immigrants. It is estimated that this more extensive crackdown will save over £1 billion.
Employers are advised to check that their systems are adequate to prevent abuses of the system. Areas to which particular attention should be paid include any where documentation is informal, where payments are made in cash, or where a blind eye has been turned to irregular practices.
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