Revenue links up with Customs in crackdown on rag trade tax avoidance

A nine-month pilot project targeted at the clothing manufacturing industry in London has been used to assess how the Whitehall’s aim of joined-up government could be made to work in practice.

Launched in July 1999, the pilot has proved popular with the departments and agencies running it – including the DTI, Benefits Agency and the Health and Safety Executive – businesses targeted by the initiative and the accountants advising them.

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

Additionally, the 51 businesses targeted so far typically are the kind which avoid VAT to the tune of £50,000 a year.

Seminars run by the steering group for accountants involved 26 firms which called for stronger penalties for non-compliance and more offences for the Once the pilot is completed, it could be continued if deemed successful, and could be extended outside the capital.

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