This week saw the first major announcement (without actually saying anything) by Philip Hammond. He pledged to be more pragmatic about when the Government’s current deficit would be cut and when parity would be achieved in their finances.
The new proposed, more transparent plan should be welcomed by the Government, as they kept missing their old targets anyway; further details on this is anticipated in the forthcoming Autumn Statement.
I find it hard to believe that he is going to commit to a plan six months before Theresa May invokes Article 50 (which we now know will be the end of March 2016. An article by BBC News details the reactions to Mrs May’s comments about Article 50.
With this new plan in mind I thought I would have a look to see just how bad the Government finances really are….
As at 31 March 2015 (per the latest accounts available), the Government was in debt by a staggering £2,103bn!!!
When year on year, we are still in deficit, it’s clear that this figure isn’t going to be decreasing any time soon. But why does this matter I hear you say…? This debt is described in the Government accounts as, ‘To be funded by future revenues’, i.e. tax take. Which brings me on to how this may affect business owners. In order for the Government, to achieve the above, HMRC has a new mandate, ‘to maximise revenues due and bear down on avoidance and evasion’ as per the HMRC website.
With such a mission statement, it’s not hard to envisage (and we have seen it before) for HMRC to be a little over zealous when dealing with businesses, possibly because they have little guidance on what they are allowed to do; and possibly because they are under too much pressure to do the right thing.
As such, it is imperative that when approached by HMRC that you talk to us first and don’t take what HMRC say as the gospel truth. They are not simply out to make sure your tax position is correct anymore, they are now after as much as they can get from wherever they can.