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Taxing Times
As we learn that the British taxman is seeking powers to withdraw funds directly from bank accounts, it has also emerged that the Inland Revenue has sent electronic snoopers after homeowners renting rooms to tennis fans during the Wimbledon Championship.
Renting out flats or housing has been a nice little earner for residents of SW19 for some years: A flat can fetch £900 a week, a large house £8000. Previously, HM Customs and Revenue sent snoopers around post offices and newsagents to catch advertisements pinned to the noticeboards offering properties for rent. However, the internet age has put paid to this tradition, and most rooms are now advertised online.
So its employees don't have to sift through Craigslist and Google manually, the HMRC's techies have come up with search "spiders" which will crawl the web tracking down advertisements for Wimbledon rents. The system was put in place last year, and the HMRC says it has successfully identified a number of online traders who failed to declare revenue.
Once Wimbledon rumbles to an end this weekend, the Cybertaxman and his spiders will turn their attention to Edinburgh, where it has become a long-standing tradition to get out of
As the Guardian reports, the biggest challenge for the Cybertaxman is Ebay, the online auction house. An estimated 100,000 people in Britain earn more than a quarter of their income via Ebay, and the government is concerned that not everyone declares. Worse, Ebay is anonymous and it is often difficult to tell the difference between individuals offloading unwanted stuff and professional traders.
Still, HMRC can demand that website owners hand over details of transactions to cross reference against tax records... it's not easy to hide online.
There is, however, the question of how much this is costing and how efficient it is. Government IT schemes are not noted for being cheap - on the contrary. Does the money spent on, say, developing a programme to track down two-week landlords in Wimbledown cost more than any likely revenues raised?
In France, the wealth tax famously loses the state more money than it brings in. The rich cross to Switzerland, Belgium and Britain to escape it, losing the French Fisc much more in income tax than it would gain from them in wealth tax. Does Britain's Cybertax Snoop have the same effect? If so it is another example of the current regime's mean-spiritedness: Better to shake down subletting students in Edinburgh than tackle the Russian oligarchs who have made London their home!
