The data of all card transactions through which payments are made to retailers and traders will be provided to the taxmen so as to enable them to assess the money going to particular businessmen through this mode of payment. Tax authorities can now demand and get all the information regarding payments made using particular cards. This will help them identify traders and business that are defaulting on their dues or not paying them according to the income tax laws.
This is for the first time that H M Revenue & Customs will get hands on all the information regarding payments received through debit and credit cards by the traders and other UK firms. What this implies is that HMRC will now onwards get inside the transactions that were disclosed on to the companies that processed them.
This means the card companies that provided their services to the traders and their customers. These traders could be café owners, restaurant owners, retail shops, garage owners, hotels, and just about any other business owners. The information thus collected will be cross checked with the information furnished by these traders to the taxmen to make sure that they are paying the right dues to the government.
Earlier, HMRC had no way to verify if the hotel owner was telling the truth about the payments it received through credit cards and all taxmen could do was to post a spy outside to count the number of customers going in and coming out. Now HMRC will have authentic information on the plastic money received by the owners of various businesses. According to an estimate, this new policy could help the economy by reducing tax fraud by at least £50 million per annum.