Buy to let landlords are among a ‘high risk’ group of people who evade their fair share of tax in the black economy and should face far tougher penalties claim MPs.
The allegation was contained in a report in The Telegraph and followed a previous disclosure by the newspaper that the Public Accounts Committee was concerned that professionals such as barristers and hospital consultants are among the two million people a year who are playing the black market to their advantage.
The report from the committee also suggested buy to let investors, particularly families who remortgage their homes to buy a smaller property as a rental investment, and bosses of online companies were also involved.
The MPs was to launch a campaign initially offering an amnesty to those who pay off their undeclared tax debts immediately.
But it would make it clear that people who continued to evade tax would face financial penalties and serious offenders would end up in court and a criminal record.
The Telegraph reported that HM Revenue & Customs spends £41m a year trying to track down the tax dodgers and already employs investigators to vet television entertainers and private yacht owners. A similar purge, costing £6m, on Britons with undeclared earnings in offshore bank accounts clawed back £400m for the Treasury.
In an interview, Edward Leigh, the committee's chairman, said: “The department should devise similar schemes to persuade those in other risk areas to put their tax affairs in order.
“HMRC must also do much more to publicise both the benefits of joining the formal economy and the potentially serious consequences of not doing so. And if such publicity is to have any effect, then it must be backed up by resolute action by the Department to complete more investigations, apply the full range of new penalties available and ramp up the number of prosecutions.”
Leigh added that overall HMRC was apparently making little ground in its efforts to diminish the cash-in-hand culture operating in the UK, with more than 98p percent of offenders not being caught. Even for those who were trapped by tax inspectors, the penalties were ‘relatively trifling’, even though HMRC can impose penalties of repaying all of the tax owed.
The report found that in 2006/07 penalties of £5m, which is only 3 percent approximately of the unpaid tax, were imposed.
A spokesman for HMRC told The Telegraph: “HMRC is committed to deterring and challenging those who do not pay their fair share. The Department is detecting more unpaid tax through new ways of working – such as the Offshore Disclosure facility, which has already brought in over £400m in unpaid tax.”
