HMRC can’t close the tax gap by making numbers up

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Ths FT reports this morning that:

HM Revenue & Customs booked more than £8bn of extra tax from big businesses in the year to April, helping push up its overall yield from investigations 15 per cent to a record £23.9bn.

The UK tax authority said its "record breaking" compliance results were nearly £1bn ahead of the target set in last year’s Autumn Statement and £9bn more than it raked in three years ago.

Anyone would think I should be celebrating, but I am not.

I am, of course, delighted when HMRC achieves results against tax avoiders and evaders. That has to be its priority. But there is a massive problem with these numbers and the clue to it is given in another part of the FT text (I assume it got an exclusive on the story, by the way, hence my willingness to quote):

HMRC said its compliance work had brought in more than £1bn from criminals and £2.7bn from tackling avoidance schemes in the courts.

In addition, it had protected the Exchequer from future tax avoidance by closing corporation tax and stamp duty land tax loopholes, it said.

It is expected to step up its efforts to bring in unpaid tax to meet a government target of an extra £24.5bn in the year to next April, and £26.3bn the following year.

So what we actually have, it seems, are relatively small tax recoveries and massive claims for the impact of new tax legislation in deterring tax avoidance and evasion.

Now I, again, have no problem with effective new tax legislation - which is why I propose it - but to claim this is the result of tax compliance activity is, to be polite, political fantasy and a PR department's figment of the imagination. That's firstly because legislation is parliament's responsibility and maybe HMRC should remember who it is working for and secondly, it's hard enough estimating tax gaps well (and HMRC are lousy at it) but it's nigh on impossible to estimate the impact of new legislation, whatever HMRC would like to claim. The result is that at best this number is simply made up and the whole basis of this claim is bogus.

I would like a tax authority in the UK that knows what it is responsible for and states facts, not fiction when it comes to news releases. Right now we have not got that, and on this particular item matters are getting steadily worse.

Such releases might appeal to the vanity of ministers. They might be used to justify cuts. But the truth is that they don't collect tax. Only people on the ground do that and they are having their jobs cut. That's the issue and HMRC are ignoring it. No, worse, they're trying to disguise the impact if those cuts.

How I wish for an honest tax authority.