TAXATION - Clawback to target cyberspace
A taskforce is urgently needed to combat the possible loss of billions of pounds of tax revenue into a ‘cyberspace black hole’, the Chartered Institute of Taxation claims.
John Andrews, the institute’s president, called on the UK’s taxation authorities to join forces with tax experts in a bid to prevent the cash loss in the rapidly burgeoning sector.
Andrews, who aims to boost interaction between the CIoT and the government during his presidential year, warned delegates at a joint CIoT and Inland Revenue conference on Sunday of the growing menace.
Revenue and Customs & Excise spokesmen said they were keen to examine ways of stemming lost funds. The EC is currently examining the possibility of introducing a ‘bit tax’ on every ‘bit’ of information sent electronically.
Unless action is taken soon, claimed Andrews, future tax revenues could be siphoned off to other countries or not paid at all as more deals are completed using the Internet and other electronic trading methods.
‘UK plc is in danger of being bypassed by cyberspace trading and we must jointly discuss possible actions to be taken,’ said Andrews, who predicted the possible loss could outweigh the forecast u7bn gains made through the spend-to-save initiative.
Corporate traders using tax haven-based computers programmed to buy and sell commodities can avoid corporation tax. Similarly, VAT on software purchased over the Net can also be dodged by electronic traders in the UK.
