On 13th March the Chancellor of the Exchequer delivered his annual Spring Statement. The statement is essentially a progress report on the changes made in the previous Autumn with forecasts and proposals for the future.
This year’s statement addressed a few areas of relevance to UK businesses, but one of the most significant proposals is a crackdown on the so-called ‘black economy’. The government estimates that approximately £3.5billion is missing from the UK’s economy; they believe this due to traders making cash-in-hand deals with customers in order to avoid paying tax on their earnings.
To tackle the problem they’re proposing two possible solutions:
- To introduce a cap on the size of payments which can be received in cash
- To make receipts compulsory for everything.
Some business experts have expressed concerns about the proposals believing they could unfairly cripple businesses which are operating within the law but sometimes need to deal in cash.
Head of taxation at accountancy trade body ACCA, Chas Roy-Chowdhury, said: ‘The Government should have no truck with tax avoiders but we must be cognizant that we don’t want to things to become unnecessarily bureaucratic, for instance having to issue receipts for everything.’
The Spring Statement also outlined plans to make the next revaluation of business rates earlier by one year, taking place in 2021 rather than 2022 and then every 3 years from that point. This means that business rates will be recalculated more regularly and should be in closer alignment with property rental values.
The government are also inviting the public and businesses to comment on some proposed future changes to the tax system including:
- Encourage less single-use plastic waste through the tax system with the money being used to create greener products and services
- Ensuring multinational digital businesses pay a fair share of tax
- Seeking new ways to support people and businesses who use digital payments while ensuring that those who need to are able to pay with cash and preventing the use of cash to evade tax and launder money
- Supporting people to get the skills they need by upskilling and retraining.