Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what steps she is taking to tackle tax evasion in hair salons.

The Government recognises that sometimes businesses do not declare all of their income and thereby conceal their true earnings. We are committed to creating a level playing field for all, by ensuring that everyone pays the right amount of tax at the right time, to ensure trust and fairness in the tax system. Most taxpayers pay what they owe, but a small minority fail to register with HMRC or only declare a portion of their earnings. This small minority deprive our vital public services of funding, affect fair competition between businesses, and place unfair burdens on everyone else. It is vital these revenues are collected to fund our essential public services. Closing the tax gap and making sure that more of the tax that is owed is correctly paid, is one of the Government’s top priorities for HMRC.

HMRC is making it increasingly difficult for businesses to hide their earnings and have an extensive range of powers, including information gathering powers, that help build a picture of risk and identify those who are trying to abuse the system. HMRC’s approach to tax evasion aims to tackle current non-compliance and change future behaviours. Their activities include national campaigns and specialist task forces that incorporate intensive bursts of activity in targeted sectors, such as the hair and beauty sector, and locations across the UK. This includes providing customer education highlighting the importance of keeping accurate records.

We recognise that some customers can find it hard to understand their tax obligations, so HMRC are developing and testing new educational material to better explain the rent a chair model. This is planned to be ready for publication on GOV.UK in the spring.