As of this month, HMRC will have access to information on all credit and debit card payments to UK businesses, to enable the taxman to find out the number and value of transactions in the hope of reducing tax fraud by some £50m, reports chartered accountant Harris & Co.
The new powers to access merchant data, introduced under the Finance Act 2013, will not permit access to personal data identifying the card owners or card numbers, however the data collected will be used to ensure that traders have correctly accounted for all taxes due – levelling the playing field for all businesses.
Announced in the same week as it launches a tax evasion advertising campaign, HMRC estimates that this information could reduce fraud by over £50m per annum.
Exchequer Secretary to the Treasury David Gauke said that tax evasion and the hidden economy cost the taxpayer £9bn a year.
‘While the majority of traders are honest, they may find themselves undercut by the minority who seek to lower prices by cheating the tax system.’
‘The government has given HMRC nearly £1bn to tackle fraud and evasion, and these new powers give HMRC an extra tool to ensure a level playing field between businesses, and also reducing opportunities for those who try and cheat the system.’
The legislation allows HMRC to obtain data on card payments to all UK businesses for the previous four years.
The first requests for the data will be sent to merchant acquirers this week and from next year this will be an annual request.
HMRC will analyse the data using its sophisticated risking system, Connect, which will cross-reference and compare the data with what the tax authority already holds.
The process will allow HMRC to identify fraud and evasion.