Joint-working project unearths £1m extra tax in fashion industry clampdown

Launched in July last year, the nine-month pilot project was targeted at the clothing industry in London and was designed to assess how Whitehall’s aim of joined-up government could be made to work in practice.

Officials from the Inland Revenue and Customs & Excise along with other government departments and agencies used the pilot to prove how closer working across Whitehall can help educate business and tackle fraud.

Speaking to Accountancy Age, Primarolo said: ‘The results of the pilot so far are encouraging, and I have agreed for it to continue for another year. I am sure the pilot will help us develop more appropriate ways of delivering government services to the benefit of business, the community and to government itself. It has also taught us that we can work together effectively.’

Each department had its own responsibilities in working with traders in the fashion industry. Customs and the Revenue advised traders on how to meet their tax obligations.

Non-compliance with PAYE and VAT is seen as rife in the industry. Current estimates indicate the ‘rag trade’ accounts for some £400m of lost tax revenues across the UK with half of that attributed to London.

The second phase of the project will see a dedicated team established to further progress the work.

A leaflet ‘Starting Your Own Business in the Fashion Industry’ has also been launched to inform traders of their legal obligations and provide contact points for further information. It will shortly be available in ethnic languages as well as English.

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