Tax Evasion Crackdown

With the recent sentencing of famous Italian fashion designers Domenico Dolce and Stefano Gabbana, tax evasion has become a hot topic. The duo was sentenced to 20 months in jail for hiding around £833m in tax from Italian authorities by moving their brand to Gado, a Luxembourg-based company in 2004.

Public opinion seems to be in favour of clamping down on tax evaders, as the HMRC tax evasion hotline receives 300 calls a day. The hotline allows members of the public and businesses to inform the Revenue of suspected cases of tax evasion. However, although calls to the hotlines remain high it does not necessarily mean that large amounts will be recouped through investigations, with questions hanging over HMRC about whether they have the manpower to cope with the influx of calls.

The issue is further highlighted by the topic being discussed at the G8 summit in Lough Erne, Northern Ireland. The leaders at the summit have agreed new measures to crack down on illegal tax evaders and corporate tax avoiders, with the summit communique urging tax authorities and Governments to “Automatically share information to fight the scourge of tax evasion.” They also want countries to change the rules that allow companies to move their profits across borders to avoid taxes, and multinationals should be required to report what tax they pay and where, to tax authorities. Furthermore, companies should have a duty to know absolutely who really owns them, and they should be able to easily provide this information to tax collectors and law enforcers. Finally, the communique went on to say that “Developing countries should have the information and capacity to collect the taxes owed them – and other countries have a duty to help them.”

Of the 10 points raised in the communique, 4 are dedicated to the issue of tax evasion, highlighting the need and want to clamp down on it. With the growing financial burdens being placed on the average, law-abiding tax payer this can only be a step in the right direction, and we hope that Governments have the will and commitment to see it through.