What Prevents People from Evading Tax

In: Business and Management

Submitted By ibic93
Words 9892
Pages 40
Dissertation by Ishfaque Ahmad

1

Chapter 1 – Introduction

Chapter 1 – Introduction
“At a time when the Government is tackling the deficit, against a backdrop of global financial uncertainty, it is vital that we focus relentlessly on cracking down on those that break the law and making sure that everyone pays the tax they owe” (HM
Revenue & Customs, 2012, p. 4)
Every year the UK Government spends billions of pounds to provide a better life for its citizens. Most of the money the Government is spending comes from tax revenue. Tax revenue allows the Government to budget expenditure such as education, health and welfare, housing, protection, re-paying national debts and improving the infrastructure. Without tax revenue, the government would not be able to fund the projects and services that people require.
Following the recent recession and the global financial crisis it is important to increase tax revenue for economic growth and keeping the economy moving. The majority of the UK’s individuals and businesses pay their share of tax honestly. However, a minority deliberately seek to evade or avoid paying what they owe while benefiting from the public services (HM Revenue & Customs, 2013). As a result the Government does not receive enough tax as budgeted but spends more than what is collected. This is called budget deficit. It leads to either cuts in the budget of projects or borrowing money from other nations to fill up the deficit. Borrowing is an expensive option and currently the UK government is trying to reduce its national debts and to fill up the deficit with cuts in projects. For example, the UK Chancellor George Osborne recently announced further £25bn spending cuts and much of it from the welfare budget
(Osborne, 2014). The cuts were mainly to reduce the deficit. The UK Government is also trying to reduce the deficit by…...

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