HMRC have been issuing massively misleading reports that the tax gap fell by £7bn last year.
It didn't, and I have explained why here. Using their own, dodgy, methodology it fell by £1.3bn in real terms at most.
But that ignores another issue. The gap in cash terms fell last year by at least £2bn because of the cut in the VAT rate, and not because of HMRC effort.
But this year the VAT rate is 20%. So right now the VAT gap will have automatically risen on the basis of the same rate of crime by not less than £3.8bn. That follows like night does day as the VAt rate has risen from 15% in most of 2009/10 to 20% now.
And what is HMRC doing about this? It's cutting staff. It's closing tax offices. It's pulling staff off the front line that might address this problem.
£3.8bn is almost what it costs to run the whole of HMRC a year - and that whole sum is going to be lost because of the VAT rise, and apparently that gives no rise to a change in policy to recover this loss.
That is ludicrous. Who else would sit back and note they're bound to lose this much unless they take action and shrug their shoulders and say c'est la vie? Only Dave Hartnett, David Gauke and George Osborne, I guess.
I've suggested that increasing staff at HMRC by 20,000 would cost £1bn - and suitable staff are out there in the economy right now wanting this work - many of them sacked by HMRC in recent years. They could even pay a premium to lure trained people back. And the payback would be enormous. But no, the government won't take action.
Why not? Well you have to conclude that Hartnett & Co want the tax to be in the pockets of the cheats and crooks because they sure as heck aren't going about collecting it.
What a ludicrous and dangerous state of affairs that is where the state sits and looks at organised crime and does nothing.
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‘What a ludicrous and dangerous state of affairs that is where the state sicks and looks at organised crime and does nothing.’
Seriously, and following on from the Hartnett ‘errors of governance’ item yesterday, what your latest analyses demonstate is that HMRC senior management has been infected with the same tendency for extreme spin and propaganda that afflicts an increasing number of public service organisations and government departments. This disease has been passed down from the political domain, where it continues to thrive and mutate into ever more devious forms (e.g. Gove and his flunkies and Free schools).
My understanding is that some senior civil servants continue to resist the spread of this disease, but Hartnett and his colleagues are clearly not in that group. Indeed in his case, he could be classed as a primary carrier. From the perspective of public adminstration what’s particularly worrying is that here we have an organisation that in the past may have been dull and committed to its primary function, sometimes to the detriment of its relations with taxpayers, now so obsessed with being ‘customer focused’ that its rapidly forgetting what its primary function is. Add to that cuts in resources that leave it increasingly unable to operate effectively and all that’s left to fill the gap with is spin and propaganda.
I’m sure Hartnett and his senior colleagues, plus the HMRC Board, are very happy with the shadow of an organisation they’ve created.
I know you don’t like George Osborne. Neither do I. I expect it’s something of a chore for his mother… but the tax gap (whatever the number is) didn’t turn up the day he walked into No11.. we know this, you were telling everyone about it before he did. So where there is fault for allowing it to grow, and failing to deal with it, it doesn’t lie with any one chancellor. Yes, cuts to HMRC resources would appear counterproductive.. but what would a Labour government have done? Because whatever they did when they were in office obviously didn’t do much good.
Given that I know you recognise the failings of the old government, I find it odd that you’ve taken to focussing so much of your ire on the new one… when this is clearly not a party political issue.
The decision to carry on with and increase the cuts in the face of the crisis was a Tory one and so wholly their responsibility
I blamed Labour when it was their issue
Now I blame the Tories when it’s theirs
That’s totally even handed
Maybe you’re just enjoying it more now 🙂
It is not just investment in HMRC that we need, but more laws around the cash economy. Banks should have to report anyone with regular large cash movement (and a t a much lower amount than the current £10,000 odd), companies should be forced to pay all wages into bank account and not in cash and an advert should be run (just like the benefit cheat ones) that tell ordinary people that paying cash for a discount may open you up to aiding tax evasion.
Caroline Lucas proposed a simple law so that banks would have to tell HMRC which companies they operated bak accounts for to tackle dormant company abuse and HMRC said it was not a problem
I agree with you