Lap dancers and dog breeders narrow the coronavirus tax deficit

Less tax for HMRC

According to AJ Bell, HMRC received 42% less in tax payments in April 2020 than April 2019. The biggest fallers have been insurance premium tax (presumably because fewer people are taking out insurance), income tax and national insurance (due to people being furloughed or losing their jobs).

Clearly this provides a massive challenge for the Government to balance its books given the cheques that it is handing out like confetti for the various support packages.

Lap dancers and dog breeders

While it would be wrong to say that lap dancers and dog breeders have saved the day, HMRC have been increasing their tax take from these groups through their special task forces. The main sectors that have been targeted are:

• The adult entertainment industry;
• Dog breeders;
• The haulage sector;
• Market stall traders

Analysis by Pinsent Masons shows that the tax take from the task forces have been increasing steadily:

• £138m in 2014/15;
• £248m in 2015/16;
• £388m in 2016/17;
• £464m in 2017/18;
• £540m for 2018/19.

Although the task forces have apparently been redeployed during lock-down (possibly not much lap dancing activity anyway) we can expect them to double up their efforts when the pandemic resumes. The Treasury has apparently forecasted that HMRC will collect an additional £4bn in tax over the next five years and the use of task forces will play a critical role in achieving this.

Forbes Dawson view

It is somewhat comforting that HMRC seem to be getting more efficient at catching tax evaders because that could ease the strain on honest tax paying citizens. However, this is probably a drop in the ocean in comparison to coronavirus costs and we all need to brace ourselves for the inevitable tax rises. The only question is what shape will these rises take? (the smart money is on capital taxes like capital gains tax and inheritance tax). In the meantime the only good tax news for lap dancers seems to be that their sanitising wipes should be tax deductible!

 

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