Banks and the tax man

Banks may pass savings details to HMRC Banks and wealth managers may be asked to pass sensitive information directly to HMRC as tax authorities look to pull in around £5.5bn a year believed to be owed from earnings that taxpayers fail to mention on their tax returns. This comes as HMRC looks to close the £31bn tax gap - the difference between the amount of tax paid each year and what it believes should be paid. A review by the Office of Tax Simplification (OTS) has called on financial services firms to offer views on how they might send information on things such as interest payments, dividends, Gift Aid and pension contributions to the taxman. The OTS document said: “Instead of millions of individuals having to provide to HMRC details of potentially taxable income and gains on their investments, the review will consider whether it could instead be uploaded by their investment or wealth management company.” An HMRC spokeswoman said the OTS study was “an own-initiative review” by the group, rather than one commissioned directly by the Chancellor. Meanwhile, James Coney in the Sunday Times says addressing the tax gap could help Rishi Sunak balance the books, post-pandemic. He says the Chancellor need not “change any taxes to rake more of this in, you just need to improve the system”, with HMRC “already heading in this direction” through Making Tax Digital, which he says “formalises many informal payments that used to slip through the taxman's net”.