HMRC are not the only ones at it . . . Italy to crackdown on tax evaders and cheats

In The Independent on 5 January, Michael Day reported that Mario Monti and the Italian government are going to crackdown on tax evasion and tax cheats in Italy…

The Italian government plans to investigate tax cheats and tax evaders by adopting enquiries into suspected offenders’ bank accounts using the Italian authorities’ new computer system named ‘Serpico’.

The announcement of the new technology has caused concern from Italian residents. Political activist and comedian Bepe Grillo described Italy’s tax office – The Equitalia – as the “terror of every Italian”.

The annual loss of tax in Italy is thought to average anywhere between 120bn to 300bn Euros a year – the equivalent of £99bn to £247bn.

For example, in 2011, 15 million Italians claimed that they did not receive any net income for the year and many yacht owners have claimed to be earning less than 20,000 Euros a year, equivalent to £16,000.

In a bid to balance the budget by 2013, Prime Minister of Italy, Mario Monti, wants Italians who have evaded or cheated taxes to “cough up”.

Despite losing 275bn Euros in tax last year, the equivalent to £226bn, figures published in December 2011 by the Bank of Italy showed “that in terms of personal wealth, Italians are possibly the richest people in the world, highlighting the imbalance between Italy’s vast personal wealth and the desperate state of the public purse”.

Other tactics that the new Italian government are going to adopt in their crackdown on tax evasion is to lower the criminal offence threshold for tax evasion and to cut off cash transactions at a maximum of 969 Euro, the equivalent to £800 per transaction.

Another problem that Italian Prime Minister, Mario Monti, is faced with is how to tackle money hidden by Italian residents in offshore bank accounts held overseas.

A banking authority in Switzerland “estimates that the banks there are harbouring 130bn Euros of Italian assets, stashed out of reach of Rome’s tax authorities”, the equivalent of £107bn British pounds.

For example, in The Independent, Michael Day reports that “at the end of last year a couple from Venice were nabbed by the finance police after declaring only six euros of income in a decade. A 10 year audit performed on the alleged tax cheats found more than 300m euros (£247m) of undeclared wealth, much of which was tucked away in foreign accounts”.

These are the kind of tax evasion problems that the Italian Prime Minister is faced with the hard task of finding solutions for.

The Independent states that “middle class professionals such as lawyers, doctors, architects as well as business owners” are “responsible for most of the evasion” in Italy and that the Italian Prime Minister should be focusing his attention on these categories in order to crackdown on tax evasion in Italy.

Professor Franco Pavoncello, a political scientist from John Cabot University of Rome, said:

“Clamping down on tax evaders is a hugely important issue. Among the self-employed there’s this attitude of ‘why should I pay my taxes – the government will only squander it, or it’ll be lost to corruption…’

“Attitudes are now changing; people are now saying; ‘why should I be poor when this person who’s not giving me a receipt isn’t paying his taxes?’”

The Independent states that there are five million self-employed workers in Italy, compared to 2.7 million in France and 3.9 million self-employed workers in Germany.

Professor Gavazzi, an economist from Bocconi Business School in Milan, said:

“Until the government lowers the burden of taxation there’s always going to be the incentive to evade taxes; the overall rate here of 45 per cent is just too much.”

In order to resolve the large numbers of Italians who evade their taxes, Gavazzi says that the Italian government “will need to cut public spending to reduce it”.

Kevin Kinsella Jnr, at KinsellaTax, said:

“’Now the Italians are having tax investigations’ should make a good comedy film.”

If you have committed Tax Evasion or have been accused of tax evasion by HM Revenue and Customs (HMRC), you NEED to fight it.

First and foremost you should appoint a tax evasion enquiry expert.

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