Tax department told to get tough on dodgers
Tuesday, November 29th, 2005Accountancy partner ‘earning £20,000’
The Gibraltar Tax Department has been told it should introduce tougher penalties and longer prison sentences for tax evasion.
And it is being urged to introduce a stronger investigation function to include in-depth examinations of accounts and records in cases of tax evasion that should be followed up with legal action.
The remarks are made by the Principal Auditor in his recently released 2003-2004 report on the Government’s annual accounts.
With PAYE arrears heading for £9 million as at last March, the Government is again being urged to take action to press for payments from defaulters and evaders.
PAYE is deducted from workers’ pay by employers and the delay usually occurs in passing this on to the government Government’s global arrears, ‘dinero en la calle’ as such, totals over £50 million of which some £31 million is in income tax and corporation tax.
In key findings on this area the Auditor also had a swipe at some self-employed senior professionals whose returns appear to be too low. The sample showed a partner in an accountancy firm declared income of around £20,000 and this was accepted without question.
The report calls for adequate controls to be implemented and greater care to ensure that all income declared is included in tax assessments.
It also suggests that the Commissioner should consider recommending to Government the setting of a legal time limit for the submission of accounts with penalties for failure to present these on time. He wants more controls on people who fail to make returns.
But the report confirms the continued failure to investigate the self-employed. It says that no investigations have been carried out since April 1999 which the tax department puts down to insufficient human resources.
In one example the records of a self-employed person with a low declared income, queried by the Tax Department, were examined. When the taxpayer was asked how he could manage to live on the amount of drawings shown in the accounts he replied that the department would need to contact his accountant as he was unsure.
The Auditor notes that the Tax Department said it did not have time to pursue the matter and he notes “Curiously enough the income declared by this taxpayer doubled in the following tax year.â€
£1M ‘slips the net’
A millionaire’s declaration of a £1 million dividend to the Gibraltar Government Income Tax Commissioner slipped past officials, it has emerged from a sample check of 41 self-employed persons.
In the £1m case the dividend was declared in the 2001-2 return but not taken into account in the assessment. The Auditor notes that normally, when dividends are paid to self-employed persons the corporate section informs the self-employed section and passes it a copy of the return of the dividends paid by companies. In this case there was no copy of the return in the file nor were subsequent years followed up where the return stated ‘as supplied to you by my bank’.
From The Gibraltar Chronicle - The Independent Daily First Published 1801
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