Search Result for michael meacher — 98 articles

Progress on the abuse of limited companies for tax evasion

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I admit I like to celebrate victories for the tax justice movement. I think that they are important. We have another new one, which would have been easy to miss. Last week’s the government published this:

What the paper says is 

Who is likely to be affected

Those who artificially and unfairly seek to sidestep their tax liabilities, arising from avoidance, evasion or ‘phoenixism’, through the misuse of insolvency of companies.

General description of the measure

This measure tackles the small minority of taxpayers who artificially and unfairly seek to reduce their tax bill through the misuse of insolvency of companies.

This will be achieved by making directors and other persons connected to those companies jointly and severally liable for the avoidance, evasion or ‘phoenixism’ debts of the corporate entity.

Policy objective

The changes to this legislation ensure fairness across the tax system by deterring the use of tax avoidance and evasion through influencing the behaviour of those taxpayers who see insolvency as a way of avoiding their tax liability.

Those taxpayers:

  • try to exploit the insolvency procedures to avoid or evade taxes and/or payment of taxes and duties
  • attempt to protect or hide the gains of tax avoidance or tax evasion
  • repeatedly accumulate tax debts without payment by running them through a succession of corporate vehicles which are made insolvent - also known as ‘phoenixism’
  • try to sidestep penalties for facilitating avoidance and evasion by going insolvent

There are, of course, provisions attached. Some are quite generous in the taxpayer's favour. But let's be clear that I welcome this, and think it should go further. I have been arguing for such a measure since 2011 and argued for a robust approach to this issue in a Bill I wrote for the late Michael Meacher MP in 2014. It's taken a  long time to come, and it's still not tough enough on those using companies to evade tax, but it's progress. And I welcome that.

Beating the tax gap

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I am on my way to Brussels this morning to speak at an EU Parliament event organised by the Socialist and Democrats Group of MEPs (of which Labour MEPs are members) on ‘Who stole our future?’. It seems that the tour has resumed despite recent events in my life. That is because I feel that it’s appropriate to do so. I will be talking about the tax gap in the context of the reshaping of society that we need. And if we are to have a future that includes the sense of public duty that my father undoubtedly embraced throughout his life then beating the tax gap is a key issue.

Several years ago I worked with the late Michael Meacher MP on this issue. Michael proposed legislation I had written to address the tax gap in the Commons as a private members bill. I well remember Jacob Rees-Mogg opposing it because he said, firstly, that Michael was a ‘socialist in tooth and claw’ and ‘this Bill would result in more tax being paid, and we do not want that’. I stress; I paraphrase.

Not for the first or last time Rees-Mogg angered me. He was right to describe Michael as a socialist. But the issue of beating the tax gap is at least in part about upholding the rule of law. Why the Right can in any way tolerate tax abuse when it threatens one of the foundations of Conservatism is very hard to understand, unless and until you comprehend that they are not Conservatives at all.

And that they are not pro-business either. There is nothing remotely pro-business about tolerating tax abuse when the consequence is that cheating businesses obtain an unfair competitive advantage over those businesses that act in the long term interest of all their stakeholders.

Rees-Mogg’s attitude was about only one interest, which was and is the selfishness that puts the interest of individuals who are willing to abuse above that of all others, including honest competitors, the law, the state and by extension all others in society. It does not require a socialist to point out the moral bankruptcy of such a position, although it seems that it helps, and makes the Left the best friends honest businesses have on the political spectrum, in my opinion.

Second Rees-Mogg was wrong to say that beating the tax gap meant more tax had to be paid. It might, of course. But I strongly suggest that since tax is primarily a tool of fiscal policy designed to beat inflation above all other goals then revenue maximisation is not the goal of any government. Rather the aim should always be to raise the required amount of tax as equitably as possible to achieve that fiscal goal in ways that achieve the secondary (but vital) goals of redistribution, repricing market failure, reorganising the economy and reinforcing the relationship between the citizen and the state. I doubt Rees-Mogg would recognise any of these.

My message today is that this is what we have to do. If we are to reclaim our future proper understanding of the role of tax is vital.

However, as my research is now showing in work I hope to publish soon, this is not the case, and there are massive impediments to doing so.

Astonishingly, official and other research data on tax is frequently inaccurate.

So too often is GDP data, which makes tax gap estimation hard.

And even the number of taxpayers is frequently subject to misreporting between data sources.

At its most basic level understanding tax is hard because official statistics seem to be perversely dedicated to ensuring that we cannot know the truth.

And when it comes to tax gaps, there is too little research and even too much denial that the issue is of consequence.

Tax cheats, both domestically and internationally, are stealing tax revenues. That is beyond dispute. But the absence of data to identify the true scale of the issue and to target resources to addressing the issue is the surest indication that they have far too many partners in politics and officialdom who are far too close to the Rees-Mogg view for comfort.

There is, I suggest, official complicity in the maintenance of the tax gap. Ed Balls was once said to have commented that he would not like to live in a country that sought to collect all the tax owing to it. I disagree: I want a state to seek to collect all the tax owing to it, but no more (of course). And that’s because to do so is the foundation of economic and social justice. We are too far from both.

Today could really mark the beginning of the end for the UK’s tax havens

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Today MPs vote on an amendment to the Sanctions and Anti-Money Laundering Bill that would require the UK to impose a requirement on the UK’s Crown Dependencies and Overseas Territories that they create registers of the beneficial ownership of companies if those places fail to do so of their own free will.

This matters. Most of the time most of what happens in Westminster appears technical, distant and remote. And, let’s be honest, also rather boring because much of what is done is whipped, which means MPs vote as they are told to do by their parties. That provides much of the explanation for the low attendance in the Commons Chamber, I suspect.

But every now and again MPs get a chance to tilt the world on its axis, at least just a little. This is one such chance. Tax haven secrecy is, as I have long argued, deeply corrosive. It undermines fair competition. It creates and reinforces wealth inequality. It undermines the rule of law. It threatens democratic states' ability to tax, which effective management of their economies requires. And it aids illicit activity from sanctions busting to election rigging, crime and trafficking in all its ugly forms.

As a result if the tireless efforts of Margaret Hodge MPs have a chance to shatter this secrecy. And that would send a message to the world. First, it would say that the City of London is only open to honest business, because right now they use the tax havens to route the illicit parts.

Second, it would say the UK is a believer in fair competition.

Third, it would say that we will uphold democracy, the rule of law and the right to tax.

Fourth, it will say cheats should play no part in our society.

That’s why I say:

Will it happen though? The government is fighting a furious rearguard action, but which simply promises action when the rest of the world agrees, which is no promise at all. I hope no one is conned.

For the record this is the amendment that MPs will be asked to vote on, with those supporting it already named on it:

And as a footnote, the last time the Commons was presented with such an opportunity I wrote the clause in question for the late Michael Meacher MP. It was clause 9, here. I have a very real interest in this issue.

The law we need to really regulate companies and trusts

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John McDonnell appropriately called for proper registers of beneficial ownership for companies and trusts in the Uk and its Crown Dependencies and Overseas Territories today. And I support the call.

But the call is not enough. That's because right now the UK supposedly has a register of beneficial ownership of companies and the result is an absolute farce. Recent evidence reported in Scotland was that there are just four people at Companies House in Cardiff who check the near four million annual declarations submitted by UK companies each year. This, of course, means it is impossible for them to undertake any proper checks at all on these returns. The consequence is obvious: there is in effect no checking at all on the returns made by UK companies, which can be nonsense as a result.

And that means we do not have a Register of Beneficial ownership in the UK; we have a sham that masquerades  as such a thing instead. And that is no use to anyone but a government that wants to claim it is doing something about abuse when it is actually doing nothing of the sort. In that case this is not a model to copy.

So, what can be done about this? Two things, I suggest. One is to employ a lot more people to properly regulate companies, both at Companies House and at HMRC. And this need cost the taxpayer nothing: make those using companies pay for the costs of properly regulating them is the way to avoid that. It's really not hard to put up Companies House fees tenfold (to £130 a year) to deliver a vastly more effective service at no cost to the taxpayer at all.

Second, law that I wrote in 2013 needs to be passed. That law is here. Only clause 4 onwards matters. I also reproduce the relevant bits below because I did not write that law for the late Michael Meacher MP for fun: I wrote it because it needed to be law and as I recall it Jacob Rees Mogg talked it out in the Commons.

What that suggested law did was seven things.

First it demanded more rigorous beneficial ownership disclosure in the UK than we have now got.

Second it demanded that banks - who have to prove who the beneficial owners of companies are to open bank accounts for them - must share the data they hold on all companies to whom they supply services to HMRC and Companies House.

Thirdly, it demands that Companies House and HMRC use that data.

Fourth, it says that if the data suggests that a company has a bank account neither Companies House or HMRC are allowed to assume it is not trading and so 'strike it off' the Register of Companies without it having paid all fees owing or having filed its accounts and paid its tax.

Fifth, it says directors who think they can get away without doing what is required of them by law should get a shock by finding they are personally liable for all taxes and fees owing by the companies that they direct if the company does not pay on time.

Sixth, it extends this obligation to trusts.

And seventh, it extended the obligation to our Crown Dependencies and Overseas Territories.

The point is that this drafting got through the parliamentary draftsmen: they accepted that such a Bill, even if written by me, could be tabled in parliament and it was. In other words, it could be UK law.

I suggest that it is time it was tabled again.

And this time it needs to be passed.

I urge those with the power to do this to now present such a Bill and get the support it needs to become law.

And maybe this time Jacob Rees Mogg would be so kind as to not talk it out as a favour to his friends.


These are the relevant clauses:

Is the UK government consciously avoiding tax?

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I argued yesterday that the UK government really does not want to collect tax from fraudsters operating in the UK, and would rather create an environment where fraud is easy to undertake than one where regulation can be enforced.

I will be recording on this theme for the BBC today when discussing the UK's failure to properly tariffs due on trade from China which is now resulting in a suggested fine of £1.7 billion from Europe. The suggestion made in that case is not that the UK made a mistake; it is that it simply could not be bothered  to collect the tax owing.

And now Jolyon Maugham is bringing a case against Uber demanding a VAT receipt for a journey he made in a car provided by that company.  He knows, of course, that he won't get one. Uber claims it does not provide taxi services, saying its drivers do that and it is a mere booking agency. But that claim is inconsistent with the facts, which have been upheld because Uber drivers have been found to be employees in a tribunal hearing. At the heart of this case is a simple allegation, that HMRC has not collected a massive sum owing by Uber in VAT because it has failed  to properly appraise the facts in this case.

Are these cases all coincidence, or is there a conspiracy going on here? I suggest the latter, although I am well aware of the reaction that this will give rise to. The opinion is based on the attitude of Tory MPs. I well remember Jacob Rees Mogg arguing against Michael Meacher in the House of Commons on one of the Private Member's Bills I wrote for Michael. The aim of the Bill was to tackle tax evasion, which is money that is already due to HMRC. Rees Mogg's argument against the bill was that it would result in more tax being paid and that was undesirable as a matter of absolute fact, so it must be opposed. I was shocked but in a moment realised the true agenda. Upholding the rule of law to collect tax legally due did not matter. There are instead those in the Conservative Party, from top to bottom, who are more than happy with tax abuse because it means there is less money for government and that means that austerity and the policies of intimidation against so many in society that flow from it can be justified.

It is the same attitude that means HMRC is more committed to cutting staff than collecting tax.

And the same policy that means HMRC will not properly estimate the tax gap.

And it explains why we have a General Anti-Abuse Rule for tax, because it is politically expedient to do so, but it has never been used.

Come to that, this may be why Google did not pay the Google tax.

And this is not some minor issue: this drives to the very heart of what our government is supposedly about. If, as seems likely to me, it is being run by those with an interest in favouring big business whilst offering a light touch on regulation to all-comers with the intention of making sure that only smaller tax payers are compliant whikst at the same time using a lack of revenues as justification for cuts in spending that cause untold hardship but which are in fact wholly unnecessary then this is itself a government fiunded on what can best be described as fraudulent misrepresentation of the true economic facts.  It will take a lot to persuade me otherwise.

The UK’s position on sharing beneficial ownership data is totally hypocritical

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The Treasury issued the following remarkably breathy press release last night:

Chancellor George Osborne today (Thursday 14 April) unveiled a ground-breaking international deal to automatically share information on the ultimate owners of companies with key EU allies, making it more difficult for firms to dodge tax or funnel corrupt funds.

Britain has initiated an agreement with Germany, France, Italy and Spain that will see tax and law enforcement agencies from the five countries exchange data on company beneficial ownership registers and new registers of trusts, allowing for more effective investigation of financial wrongdoing.

The Chancellor has also written to G20 counterparts, along with Finance Ministers from Germany, France, Italy and Spain, urging progress towards a fully global exchange of beneficial ownership information in order to remove ‘the veil of secrecy under which criminals operate’.

A global move towards interlinking country registries will provide, for the first time, international real-time access to tax and law enforcement agencies on company ownership.

According to the Guardian Osborne has called this a hammer blow to tax abusers.

Let me be blunt: it really would be good if the Treasury sometimes told the truth.

First, let me welcome the idea behind the movemove, the main advantage of which is in bringing Germany on board. Fears based on its history in the 1930s have long held Germany back from embracing beneficial ownership data. That they have accepted the need to now do so now is welcome.

Now let me list the nonsense. And after that the problems.

First, given that the press trailed a German / French initiative on this on Wednesday the chance that this is UK led is very remote.

Second, the UK seems a reluctant partner, apparently doing all it can to mitigate disclosure on trusts, where new rules are far from adequate and will mean that effective information exchange from the UK is very unlikely.

Third, this comes at the end of a week when media I have seen suggests that Jersey, Guernsey and Cayman (at least) are cock-a-hoop at having rebuffed calls from David Cameron that they must have readily accessible registers of beneficial ownership even for the use of UK law enforcement agencies, so how the UK thinks that now is the time to claim world leadership in this issue is very hard to credit. As I have argued, this government has proved this week to be a good friend if the forces of corruption.

Fourth, to suggest that the UK's new register of beneficial ownership will provide any new or useful information to exchange on beneficial ownership is ludicrous. This is where the problems start. The new UK register is in fact a bit like an honesty box arrangement for those committing tax crime.

There will, of course, be a requirement that companies disclose details on beneficial ownership. But there will be no way of checking if the disclosure they make is accurate.

And no extra resources for pursuing those who might not be compliant seem likely to be provided to Companies House.

Worse, we know that around 400,000 companies do not file annual returns each year as required copy law and that Companies House make no effort to recover this data. They do instead simply dissolve the companies in question, or 'strike them off' in their jargon. This is the ultimate reward for the fraudster: their crime is covered up for them after they have been trading for some time without any demand being made for accounts or ownership data, let alone tax due.

I estimate this costs the UK at least £11 billion a year and it may be more.

The government refuses to accept any such estimate.

The result is a fraudster's paradise here in the UK where we will in future only have data on beneficial ownership from already legally compliant companies when it is data on the fraudster's that we need.

The late Michael Meacher MP proposed law in 2013 to address this, which I wrote for him. The law would have required banks to supply the information they must legally hold on the beneficial ownership of companies they supply services to to Companies House and HMRC so that the best available data on beneficial ownership that has been verified is on line for law enforcement (and public) purposes. There is almost no cost: the banks have this data and they must have it by company number and so filing it would be easy. No data would imply a genuinely dormant company. Foreign banks could be required to provide this data through their UK branches.

But there is no such move now so the UK is offering to exchange wholly inadequate data that in far too many cases it will not have under this new agreement.

That makes this announcement almost fraudulent in itself. Going into an agreement you know you cannot fulfil for short term political gain is profoundly unacceptable, but that is exactly what is being done by the UK government.

Today’s Treasury Select Committee: my speaking notes

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 Treasury Select Committee Hearing

2 February 2016

Speaking notes prepared by Richard Murphy FCA

Professor of Practice in International Political Economy, City University, London


Director, Tax Research LLP

NB: These notes were produced in a hurry and have not been edited: they will include typing mistakes and some straightforward errors. If in doubt, please ask for clarification. 

The answers are prepared in response to the Treasury Committee's briefing note, here.

  • 1a. To what extent has the Treasury complied with the principles of tax policy set out in the annex?
  • Be Fair

    There is no evidence it has achieved this goal

    • The burden of tax is shifting from capital into labour
    • There has been undue emphasis on increasing indirect tax charges whilst reducing corporation tax
    • Inheritance taxes have been reduced at a time of increasing wealth inequality
    • Capital gains tax exemptions e.g. For entrepreneurs have increased beyond anything tgat can be economically justified
    • The Google tax settlement reinforces the belief that there is one rule for large companies and another for small
    • Tax offices giving people access to support have been closed and the tend is getting worse
    • Most people are hanging on phones forever to get tax help
    • The pursuit of tax credits appears to be of much higher priority than pursuing big business.
    • There is an overwhelming sense of unfairness.
  • Support growth and competition
  • Supporting large business at the expense of small business creates an unkebpvel playing field tgat hinders competition
  • UK official support for tax havens undermines the competitive status of the majority of UK businesses
  • The failure to properly appraise the tax gap or collect tax returns from approximately 1 million UK companies a year undermines confidence in the fairness of the UK tax system and hinders the creation of the level,playing field competition needs
  • The failure to require all companies, whatever their size, to report the tax that they owe denies businesses the information they need to compete when perfect information is the ore-condition if effective markets
  • Provide certainty
  • There is little legal clarity in
    UK tax law because

    • We do not provide a clearance system in most cases, even if paid for
    • We do not publish HMRC opinions on how they think the law works
    • The court system only provides clarity years after it is needed
    • We do not produce purposive tax legislation
    • HMRC / HMT guidance on draft tax legislation is usually of poor quality and often does little more than restate the law, giving almost no indication as to why it is written and what it us meant to achieve.
    • Tax offices have been closing denying ordinary taxpayers with access to the help they need.
  • Tax law is not simple
    • Simplicity may be an illusory goal but should be aimed for
    • It does not happen because we do not have a comprehensive general anti-avoidance principle of the type the late Rt Hon Michael Meacher presented to the house during the last parliament
    • We d not have purposive tax law
    • HMRC is reluctant to publish guidance in difficult areas of law
    • UK most of all we do not have simplicity because a complex society where people want choice of action requires a complex tax system to reflect those choices: tax should not constrain choice
  • Targeting
    • The Diverted Profits Tax is a perfect example of a piece of blunderbuss legislation that looks very likely to have missed its intended target but which will cause considerable collateral uncertainty
  • Provide stability 
  • A great deal of tax legislation responds to abuse. Until abuse can be ended ( and a general anti-avoidance provision would help here) the demand for new legislation will continue
  • Social change needs to be reflected in tax law so change is required
  • Practicable
  • For most people, most of the time, UK tax is practicable now
  • Demanding quarterly accounting by business is a disastrous step in the wrong direction on this issue and could lead to gross injustice
  • Coherent
  • Please read my book The Joy of Tax, delivered to all committee members
  • 1b Have the entities involved with tax policy performed adequately?
  • HM Treasury
  • Hard to be positive
  • The corporate tax road map sent out all the wrong signals - using tax as a way of saying the UK is open to business is raising a tax haven flag
  • At OECD appeared cooperative but did all it could to undermine the process e.g. DPT
  • Has opposed CBC consistently and is now in favour: hard to know what the message is
  • Has persistently argued only the largest companies and wealthiest people need tax cuts when these policies have exacerbated wealth, income and competitive disadvantages
  • Has consistently blocked EU progress e.g.on the CCCTB
  • Has with the FCO, been too lenient on British tax havens
  • Has significantly failed to forecast tax revenues correctly, meaning policy co-ordination has been wrong
  • HMRC 
  • The HMRC boundaries are unclear: policy is announced by HMT and consulted upon by HMRC. The result is confusion as to responsibility
  • HMRC reaches out yo far too few when consulting: funds are not made available to those who would wish to comment but are need technical support to do
  • HMRC has a very poor record is listening. It took far too long to close the Channel Islands tax loophole for this reason. They are now refusing to receive data on the Amazon and eBay VAT issue that may cost much more than the Google tax settlement. They are profoundly failing in this regard.
  • HMRC are refusing to undertake tax gap calculations that they are sufficiently confident to publish and yet publish them as fact: that is profoundly misleading and means they have nit demanded near enough the resources required to run a proper tax system in the UK
  • As a matter of fact tax policy delivery has failed in the UK due to the failure of HMRC to deliver the services UK taxpayers expect
  • Office for Tax Simplification
  • I can only recall it getting rid of some minor tax reliefs such as those on luncheon vouchers
  • What is it for?
  • Companies House
  • Maybe 400,000 companies disappear without trace in the UK each year without filing accounts or paying tax and a blind eye is turned to this. Companies House administers a regulatory environment where no real attempt is made to apply the law and a criminogenic environment is likely to arise as a result, fuelling the UK tax gap
  • 1c Does the Treasury have the expertise to design tax policy? Does it make effective use of HMRC advice?
  • HMT rarely employs tax specialists
  • HMT massively overvalues the advice of theoretical economists, most of whom have never worked in business or taxation and have little or no experience of accounting
  • HMT turn over staff far too often
  • The UK is critically short of academic tax expertise and hegemony is required of those who are appointed: it is fair to say an IFS / Oxford Centre for Business Taxation view prevails and alternative thinking outside this incredibly orthodox microeconomic paradigm that does not question the basic tenets of neoclassical economics does not exist or is suppressed. If HMRC staff want to progress they conform.
  • HMRC has a prevailing top down pro-business policy that is politically determined by a broad anti-tax rhetoric amigo get ministers that gives rise to the Britain is open to business stance that dictates low taxation as a panacea without seeking evidence as to whether that is true. You would have to be brave to challenge it.
  • The environment in HMT and HMRC is far too trusting e.g. the assumption that if a company does not submit a tax return it has never traded when there is no reason to think that true.
  • 1d. What simplification measures, whether or not previously considered by the OTS need to be on the agenda now?
  • The need is not for simplification now: that is a red herring that has wasted far too much effort and sends out the wrong signals
  • The need now is to properly appraise and close the tax gap and that requires an entirely different mind set that thinks tax is at the heart of a good society and the delivery of well being for all. The tax simplification agenda is the antithesis of this and assumes tax is an impediment to social progress when right now the exact opposite is the case
  • 2a. To what extent is the UK’s corporate tax base being eroded as business is increasingly conducted globally?
  • The tax base is being eroded internationally. But let me put this in context. I think tax haven based avoidance may cost the UK maybe £5 billion or so a year. That's a lot and should be tackled. But I think the total for tax avoidance and evasion could be £100 billion a year right now, and unpaid tax adds to that bill.
  • Again, in context, about half of UK CT is paid by multinationals. If they avoid 20% overall it is unlikely the cost is much more than £5 billion. BUT this impression may change if we had reliable country-by-country reporting data: bank country-by-country reporting data suggested the UK lost out more than expected.
  • I suspect some businesses are more compliant than they were. No one now wants to be the next on the front of the FT
  • Things like the Fair Tax Mark, signed up to by SSE is indication or progress
  • On the record country-by-country reporting will add another significant disincentive: we will see the cheats. It is disappointing it has taken 13 years to get a UK government to back it
  • 2b. Are there particular sectors that are more mobile and do those sectors make a disproportionate contribution to overall tax yield? 
  • The sectors that are mobile are important but please note three things
    • No company ever really left a country because it had to pay 20% tax: the moves they might make are a sham and would be countered by a unitary taxation system
    • What is truly mobile is cash and portfolio investment: that has to be beaten by significant investment in automatic information exchange and legal entity identification via enforced beneficial ownership disclosure on public record. It is likely that more may be lost to evasion on this issue than to large company tax evasion. Priorities have to be borne in mind
    • Third, if only we controlled our own tax havens properly (Google's unpaid tax ends up in a Bermuda account effectively under the protection of UK law) then we could go a long way to solving this issue
  • 2c. What other changes are occurring in the UK tax base, and how should the UK Government react to these changes?
  • The failure to regulate the availability and use of limited liability companies and to hold their owners / directors to account for the tax that they might owe is by far the biggest likely problem in the erosion of the UK tax base. Without proper information exchange systems from UK banks to HMRC so that the annual turnover, beneficial ownership and management of every UK company is properly disclosed to HMRC and Companies House this problem, which I think costs the UK at least £11 billion a year (and maybe more) will persist. Our focus on overseas has been useful and appropriate and should continue but we know how to deal with that issue now. We must now address the domestic issue and accept we are not investing enough to solve it.
  • The second biggest issue is the failure of HMRC to properly estimate the tax gap. It is implausible that 10% or more of VAT is lost and yet the overall tax gap is much lower than that.
  • Third, the problem is tax evasion with regard to VAT on internet supplies: this puts the Google tax into the shade but HMRC claims it has only just noticed it. It took years to notice the Channel Islands tax abuse as well.
  • Fourth is tax abuse on capital gains, inheritance tax and other taxes not directly contributing to GDP where many occasions such taxes are little better than voluntary contributions.
  • 3a. Given the inevitability of some sort of tax gap and of differences in interpretation of the "correct amount of tax", should the Government address the problem of the shrinking corporate tax base through more radical changes to the tax system?
  • A unitary taxation basis is required. See notes below under 3d as to the basis for this and other suggested corporation tax reforms.
  • 3b. If so, what type of corporate tax structure could ensure that revenue is collected in accordance with the principles of tax policy and in a way which minimises the risk of base erosion? For example, should business taxation be based on turnover rather than profits?
  • There is no case at all for taxing turnover as a an alternative to taxing profits because
    • This is not a tax on profits, and so not a tax on capital
    • The tax would be passed on: VAT increases are
    • It is as a result a tax on consumers and so shifts the whole tax base to them from capital
      • This would increase the regressiveness of the UK tax base
      • In low margin businesses such a tax could massively threaten viability without price increases
      • Those price increases could destabilise the economy
    • It would basically exempt much of capital from tax
      • Interest, rents, capital gains, hedge fund trading, derivatives and others are all subject to CT but are not sales. How would these be taxed in such a system?
    • Small businesses with longer supply changes are likely to see margins squeezed more by such a tax than big business that has shorter supply chains
      • This makes for an unlevel playing field in thee economy and rewards large business for its avoidance
    • Variable rates of tax would create massive gaming / arbitrage / avoidance opportunity
  • 3c. Should the Government consider other forms of taxation (such as the proposals of the 2020 Tax Commission) when considering how to raise tax in the future, particularly from businesses and wealthy individuals?
  • The 2020 Tax Commission provides enormous opportunity for tax avoidance
  • All profits retained in companies would be untaxed
  • All capital would be untaxed
  • This is not a serious tax proposal
  • This is a serious tax avoidance proposal intended to
    • Undermine the state
    • Shift all tax onto ordinary people
    • Increase income and wealth inequality
  • The alternative might be the suggestions I made in The Joy of Tax
  • 3d. Is there a case for a wholesale review of capital taxation?
  • There is a case for reviewing capital taxation
  • Corporation tax
  • Large company rates need to increase: there is no sign that low rates are delivering growth
  • A unitary base is needed for multinational companies
    • Group profit must be apportioned to states on the basis of where their customers, staff and tangible (but not intangible) assets are located. Extraction should be an added overweighted variable for companies in that sector
    • In principle a 1/3: 1/3: 1/3 ratio should be applied unless powerful evidence to the contrary can be supplied
  • Loopholes need to be eliminated e.g, R & D relief and be replaced with a proper industrial policy and grants
  • Capital allowances should be simplified and be on a straight line basis
  • Interest relief should not be allowed unless to a recognised bank. All other interest should be subject to tax withholding at source
  • Dividends should be subject to tax withholding at source
  • Payments of 'charges on income' (royalties and similar payments) should be subject to tax withholding at source
  • Small companies need to be taxed on a look through basis with tax withheld at source at basic rate on profits made. Relief for non-distributed profits should be available but only if it can be shown that the company is not retaining cash
  • All companies should be required to file full accounts on public record: it is the price of limited liability
  • Companies not filing accounts, tax returns or paying tax should be stripped of limited liability unless the directors and shareholders can prove this resulted from action beyond their control
  • Investment income and rents 
  • Should be subject to an investment income surcharge so that overall rates paid are akin to those on labour. Pensioners earnings below national average wage would be exempt
  • Wealth 
  • Inheritance tax should be abolished
  • An annual wealth tax is needed and is now viable because of automatic information exchange
    • Undeclared assets should be forfeit to the state
    • Undervalued assets must be subject to potential sale to the state at the undervalued sum
  • Capital gains should be charged on death
  • Capital gains
  • Should be charged at income tax rates
  • Should be charged on domestic homes, but this would need to be phased in over a decade or more
  • Agricultural property relief should be abolished
  • Entrepreneur's relief should be substantially curtailed: there is no evidence that giving tax relief on sale of a business encourages risk taking. It may do the reverse
  • Stamp duty
  • On sale of domestic property should be abolished
  • On shares and other securities should be replaced by a Tobin Tax to encourage long term asset ownership
  • 4a. Have the recent initiatives (GAAR, the accelerated payments regime and notifications under the Disclosure of Tax Avoidance Schemes) been effective in tackling avoidance?
  • There is no evidence the GAAR has so far achieved anything. I sat in the committee that wrote it and felt the aim was to produce legislation that would never be used, and that is what has happened. In that case the deterrent effect appears to be minimal. We need a proper general anti-avoidance principle that HMRC can use without consulting with the tax profession if we are to get any progress on this issue.
  • The accelerated payments regime would appear to have been effective.
  • DOTAS would appear to have been a great success: there has been an enormous decline in the marketing of manufactured tax avoidance schemes since it was introduced.
  • Labour's announcement of back dated measures to tackle PAYE abuse (the Primarolo Principle) also appears to have been very effective.
  • Measures taken against tax havens - especially increasing moves towards automatic information exchange - have been beneficial in tackling tax evasion
  • 4b. To what extent will projects such as the OECD’s Base Erosion and Profit Shifting (BEPS) project and common reporting standards help in tax collection?
  • BEPS is a sticking plaster on a tax system that no longer works. If you base international tax on a fiction that all companies are independent of each other when very large numbers are related then you end up with a make believe tax system that gives rise to fantastical tax charges, as we have seen. BEPS remains committed to this fiction and as such can never work.
  • Common reporting standards tackle tax evasion, in the main. They are a major step forward but it is vital that steps are taken to really identify the beneficial owner of companies and property in tax havens or they will be neutered by lack of any useful available information. The risk of this is high. There is also a risk that some valuable steps taken recently in the European Savings Tax Directive may be lost in the move to OECD standards.
  • 4c. What further international cooperation is required?
  • In very many respects the EU has been the most effective international organisation tackling tax abuse through:
    • The EU Code of Conduct on Business Taxarion
    • The EU Savings Tax Directive that pioneered automatic information exchange
    • Administrative cooperation
    • The drive from the EU Parliament for country-by-country reporting
    • The delivery of the first data on CBC e.g. CRD IV
  • We should co-operate much more closely with the EU now on
    • On the Common Consolidated Corporate Tax Base
    • On required changes to accounting standards to deliver full country-by-country reporting
    • On beneficial ownership disclosure
    • On enhanced information exchange
    • On delivery of consistent anti-avoidance measures, including enhanced GAARs
    • On an enhanced Code of Conduct for Business Taxation
  • We must engage developing countries in these issues. It is wholly inappropriate that they have been largely excluded to date
    • This requires engagement with these countries via the United Nations Tax Committee
  • 4d. March 2015 Budget contained a challenge for the tax professional bodies to take a greater lead in setting and enforcing clear standards around the facilitation and promotion of avoidance. Is that likely to succeed in encouraging more responsible behaviour from tax advisers? Do tax advisers need to be regulated?
  • The professional institutes have not covered themselves in glory during the era of concern on tax avoidance. There have been far too many excuses offered, far too much opposition to accounting reform, far too much support for tax havens and a complete lack of willing to penalise members.
  • There is no indication of any change in temperament amongst too many professionals (and especially solicitors and barristers who come in for special criticism in this regard) to believe any change is likely.
  • The regulation of tax professionals and the enforcement of rigorous standards is another task for an Office for Tax Responsibility
  • 4e. What, if anything, should be done to maintain or improve a culture of compliance or a sense of tax morality among the full range of taxpayers?
  • Three steps are essential
  • First corporation tax reform is essential, not because of the sums involved because of the symbolism of international tax abuse, which is akin to the MP's expenses scandal in this regard
  • Second, HMRC has yo be reformed. It cannot be run by a board drawn from big business when there is no confidence in their willingness o pay tax. A top down root and branch reform is needed.
  • Third, the tax gap has to be properly assessed and tackled: there is no chance of progress when far too many small businesses know they are competing with businesses who will never pay tax
  • 5a. Has the merger of the Inland Revenue and Customs and Excise been a success, and have there been too many subsequent reorganisations within HMRC?
  • The merger has been a massive mistake because
    • Of the mock MNC corporate structure adopted
    • The undue influence of big business
    • The promotion to senior positions of people with no knowledge of tax
    • The revolving doors that too many employees have enjoyed
    • The failure to take the tax gap seriously as a result, a culture of sufficiency akin to a monopolists be puniness strategy being the prevailing culture at the top of the organisation
  • 5b. Are the Treasury’s and HMRC’s plans for "Making Tax Digital" (as set out in the "roadmap" published on 14 December 2015) adequately designed and acceptable? 
  • It is almost impossible to think how any competent Board could have thought up this strategy
  • The demand for four tax submissions a year from business, with likely very heavy penalties attached, is going to breed massive resentment, create serious risk that HMRC will massively misestimate the true income of taxpayers, and encourage a serious risk in tax evasion
  • The digitisation of personal tax is exactly not what people want: they want and deserve a person on the end of the phone who knows what they are talking about
  • The process is linked to the withdrawal of HMRC from the society it serves: this is the breakdown of its social contract
  • The policy reveals an organisation that has wholly lost touch with the essence of its purpose of servicing society to help achieve society's objectives.
  • This policy is utterly unacceptable

What does Will Hutton want? It’s time to choose between genuine markets or continuing abuse

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Will Hutton has an article in the Observer under the title:

When will banks learn that dodgy tax practices actually cost them dear?

It's OK  as it goes, although, as has always been the case with Will, never once acknowledging the  role of civil society in first drawing attention to this issue. But then it gets to its last paragraph, where Wills says:

And while the new Labour leadership is calling for the investigation [into banking practices] to be reinstated, it is too invested in destroying or undermining capitalism to be a plausible voice in constructive reform. The government can do what it wants. Without a feasible, intellectually coherent plan for a different approach – or the political heft to back it – expect nothing to change.

It has to be said that this is nonsense of a Mandelosnian order.

Even if I am not currently doing a lot of talking to the Labour leadership it is widely acknowledged ( including by them) that I’ve influenced their thinking, and I’ve also known both Jeremy Corbyn and, in particular, John McDonnell for more than a decade. Why is that? It is not because I have been a member of the Labour Party: as I have, repeatedly, made clear, that is not the case. Nor is it because we have agreed on everything, although we have without doubt done so on many aspects of economic policy. Rather it it is for three very good reasons.

Firstly, when no one else saw the importance of tax campaigning the likes of John McDonnell, Alan Simpson, the late Michael Meacher, Kelvin Hopkins and Jeremy Corbyn did. They realised the importance of this issue in creating division in society, and that it had to be tackled both nationally and internationally, and when no one else would listen to the early campaigners for tax justice (of whom I was one) they were a reliable, persistent and willing audience who were happy to raise these issues in the House of Commons. We have a lot to thank them for.

Second, I never did, and never have believed that they did so to undermine capitalism, and they certainly did not do so to destroy it. Instead, what they pointed out, as I and others pointed out, was that capitalism was destroying itself and that unless the state stepped in to create the necessary level playing field on which all businesses could fairly compete subject to appropriate and proper regulation, transparency and accountability, and subject to consistently applied taxation laws, then there was no prospect of the capitalist part of the mixed economy in which we should all partake delivering what we expected of it.

Third, what the likes of John McDonnell realised then, and do I still believe realise, is that there is no prospect of building the foundations of a future prosperous society in this country unless the rules by which markets operate are changed. But, I stress, I have never heard any one of the so-called left-wing MPs around the Corbyn leadership say at any time in the last decade that they would wish to destroy privet business, or remove its to trade, or stop the existence of quoted companies (certain exceptions being noted, where it is obvious to almost anyone that a nationalised industry could clearly undertake the task better than any private enterprise could, such as railways) and I am, candidly, never expecting to hear them say such a thing. That’s because the rule changes they want aren’t about undermining or destroying capitalism; if anything they are about saving it from itself.

Will Hutton knows capitalism does not work in its current form.

He knows that it delivers inequality.

And he knows that it is far from being in any suitable form to deliver the benefits that it is, overall, I think capable of supplying.

What this means is that anyone who believes that we must face the future with a strong, vibrant, mixed economy where the state is the foundation and guarantor of well-being (as in practice it has proved to be, time, after time, after time) and where the private sector is allowed to build on that foundation to help some people achieve their own objectives whilst meeting the needs of other in ways the state can’t and never will do (just as on other occasions the private sector cannot and never will do what the state can achieve) has to believe that fundamental reform of the way in which we regulate markets must be a priority.

So, banking has to be brought under control.

And multinational businesses have to be made accountable using, for example, country-by-country reporting of the exact type that Will Hutton refers to in his article without ever acknowledging that this was created by the tax justice movement, with the early support of the MPs who he now appears to despise, even though he is more than willing to reap the rewards of their efforts.

In addition, the Bank of England will need to have its function and goals reviewed.

Whilst it is without doubt fundamental to this achievement that HMRC be radically reformed, be brought under proper management control, have established governance principles built into it, be accountable for the tax gap, and be required to close it.

If Will Hutton thinks that these things are undermining capitalism then I have to say he is quite simply wrong. In fact, I would go so far as to say that unless these reforms take place those who think that genuinely free markets have a role in society are sorely mistaken because they will never get anywhere near seeing such markets exist without them.

So what does Will Hutton want? A functioning economy as a consequence of the reforms that I’ve noted here, promoted by people who always had fairness, equality, transparency, accountability and the belief in the partnership between the state and business at the core of their political philosophies? Or a continuation of the abuse of markets which is what we are seeing at present and which, regrettably, New Labour had no response to, and still does not?

Time to stop the groundless comments I suggest and make some real decisions, I suggest.

HMRC’s new quarterly accounting proposals are just wrong and could backfire badly

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There is some anger in the tax profession at the creation of a strict liability offence for offshore tax evasion at present, but if I am honest I think the profession is directing its anger wholly inappropriately. Of much more concern to me are some paragraphs in the November Spending Review that will, I understand, be the subject of elaboration early next week. These say (page 71):

1.288 At the March 2015 Budget the government committed to transform the tax system over the Parliament by introducing simple, secure and personalised digital tax accounts, removing the need for annual tax returns. This will give individuals and businesses a more convenient real-time view of their tax affairs, providing them with greater certainty about the tax they owe. As the next steps in delivering this ambition, the Spending Review and Autumn Statement announces that the government will:

• invest £1.3 billion to transform Her Majesty’s Revenue and Customs (HMRC) into one of the most digitally advanced tax administrations in the world, with access to digital tax accounts for all small businesses and individuals by 2016-17

• by 2020, require most businesses, self-employed people and landlords to keep track of their tax affairs digitally and update HMRC at least quarterly via their digital tax account. HMRC will ensure the availability of free apps and software that link securely to HMRC systems and provide support to those who need help using digital technology. This will not apply to individuals in employment or pensioners, unless they have secondary incomes of more than £10,000 per year from self-employment or property. The government will consult on the details in 2016.

This change is trailed as the 'end of the annual tax return'.  It always worries me when HMRC lie:  the abolition of the annual tax return, with its replacement by quarterly tax returns, is not a step in the direction that most people would consider to be progress.  The claim is deeply misleading. I can already, very confidently, predict that a public relations disaster is in the making on this issue.

But, the issue is more important than that. As I understand it HMRC will expect every single self-employed person, and quite a number of people with secondary income, to submit details of their income every quarter, probably (is the pattern is consistent with VAT returns)  within 30 days of  the quarter end.  What they are also going to do, but which is not highlighted  in the above paragraphs,  is require that  that these people also authorise their banks to submit data to HMRC on a quarterly basis, confirming the sums deposited in their bank accounts accounts.

These requirements trouble me, greatly, but I want to put my concerns about this issue in context. No one has argued more strongly than me that HMRC should be provided  with information from banks about who is trading the UK.  Indeed, I wrote legislation to achieve this purpose in 2013, which was presented by the late Michael Meacher MP to the House of Commons, and which was talked out by the government. But, and I want to stress the point very strongly,  that legislation was targeted at a very specific, and identifiable issue, which is the fact that hundreds of thousands of companies in the UK that are asked to submit tax returns each year do not do so and, in addition, HMRC do not ask for tax returns from more than half a million companies each year without any evidence to  suggest that is an appropriate course of action.

As a result of that evidence I concluded that it is likely that HMRC are not collecting substantial sums of tax as a consequence and so I suggested legislation that would simply require that any UK bank that operated an account for a UK limited company should advise HMRC of that fact,  annually. I also suggested that if it subsequently transpired that the company in question did not submit a corporation tax return, or if that return appeared to be inconsistent with information supplied by the bank, then it would be appropriate for HMRC to have powers to ask for further information from the bank in question to assist it in its enquiries that were intended to determine the appropriate amount of tax that was due and payable.

I think that this was an appropriate, and proportionate, information exchange requirement.  It was designed to achieve four goals.

Firstly, very obviously, it was designed to ensure that HMRC could identify potential taxpayers who might otherwise try to slip pout of the system.

Secondly, and equal obviously, it was designed to ensure that HMRC did not have to chase tax returns from those companies that did not need to submit one.

Third, when matched with the obligations in the same draft legislation for banks to disclose those persons who operated the limited companies about whom banks would provide information this measure was intended to ensure that those who operated such companies fraudulently would be held responsible for their actions.

Fourth, because the information request from banks was only annual, and of limited scale, and because the information that they would have to pass over was only data that they would have readily available to them, the likely cost of achieving the goal of substantially increasing the tax take was intended to be very limited, with the main intended consequence being a 'nudge' to those who run companies to let them know that if they failed to comply  their obligations not only would they be likely to be found out, but could become personally liable for the consequences.  If I might say so, I think that was measured, appropriate, cost-effective and, most importantly, likely to work whilst arousing little suspicious or resentment amongst honest taxpayers.

Let me contrast this with the government is now proposing.  First, the government is, apparently, going to take no action on limited companies under its new proposals.  Apparently they are going to be able to trade without supplying any on line information to HMRC.  Staggeringly then the scheme now proposed will open the most extraordinary loophole for anybody who wishes to get round it by simply encouraging them to incorporate a company which they will then not declare to be trading.  It takes a quite extraordinary degree of incompetence to create such a blatant and easily used loophole  at such an early stage in a legislative proposal.

Secondly,  the government thinks the disclosure of this information will, in some way, mean that they can better tackle the shadow economy.  I suspect that there is some truth to this, although if the loophole of using a limited company persists, it will be of much less benefit than the government predict.

Third,  I think it is fairly naive to think that demanding that quarterly sales records be submitted will significantly increase the tax take. Submission will not necessarily imply completeness.

Fourth, quite clearly money taken in cash will completely miss this system.

And fifth,  the chance that bank accounts will also be omitted is significant.  It seems unlikely the banks will be asked to submit information on all bank accounts, but only on those identified by taxpayers, and this means that evasion will continue, undetected, in other accounts.

To put it another way, I am for from convinced that this information will add significantly to the quality of information supplied, and I do not think it is likely to add extensively to the identified number of taxpayers.  HMRC will instead be inundated with vast amounts of data, but whether that will be particularly useful as information (which is something fundamentally different from data) is open to question.

Even then though this is not my real concern, although I am worried about how a tax authority with so many fewer people engaged in it will actually undertake any meaningful analysis of these new disclosures.  What really worries me are several things.

The first is the additional burden on business. For years governments have tried to reduce the accounting requirements of business, and with some  reason.  Many small businesses do not need to keep detailed accounting records up-to-date at all times, or even on computer. It is nonsense to suggest that they do: there are plenty of other opportunities for record-keeping available to them which entirely satisfy the requirement that they have the information to support the existing tax return.  And the fact that quarterly reporting is a burden has been recognised in the VAT system, which itself has a very high threshold  for registration in the UK, and also has within it an option that tax returns be submitted annually, precisely to keep this obligation for accounting to a low-level.  Overturning this now would seem to be a recipe for disaster in the relationship between HMRC and small business, as well as representing the imposition of an additional cost without any necessary benefit arising to HMRC as a result.

Secondly, that perception of burden will be enhanced by the fact that it is glaringly obvious that the supply of sales data and cash bank data produces two conflicting sources of information on the activity of a business which cannot always, or even very easily, be reconciled one with another. Sales are recorded on an accrual basis i.e. when they occur. Cash is recorded when payment is made, which can be substantially later than when the sale is recognise, and also, on occasion, substantially sooner than when the income should be recognised in a set of accounts because payment has been made in advance. Without any information being made available on such matters to HMRC this suggests that they will have data which it all too easy that they may interpret entirely incorrectly.

This risk is significantly increased by the fact that deposits in a bank account do not, by any means, always represent the receipt of sales income. They may be the injection of capital, the repayment of loans, the movement of sums on or off deposit accounts, and many other things.  It is very unlikely that information supplied by banks would be able to satisfactorily identify  these differences and as a consequence it is entirely possible that HMRC may substantially misinterpret the data that they are supplied with and as a consequence believe that income is seriously understated when that will not be the case.  The risk that erroneous demands for additional tax may arise as a result is enormous.

Third, if anyone should understand that income tax is not paid on turnover then, surely, it is HMRC. As I understand it the information that is being requested by them is, however, only sales data and is not data to estimate a complete income statement or profit and loss account. It is, of course, entirely possible to have high level of sales and a low profit, even a loss.  These patterns can also change rapidly over time and without the supply of information on costs in the form of an income statement then HMRC's ability to interpret the  data that they will be supplied with will be very limited indeed.

However, it seems likely then HMRC will use this information to inform their decisions on which taxpayers to investigate, and even to make demands for tax. Why else would they want such large amounts of information on a regular basis? And why  else are they implying that tax payments on account may be brought forward in future partly as a consequence of the supply of this information?  But that these demands may be made, inappropriately, at a time when the Revenue does now have powers to  take funds directly from bank accounts does seem to me to be deeply troubling.

No one has worked harder than me to highlight the risks within the tax gap, or to make clear that a very large part of this arises from tax evasion, and I want that to be tackled.  But at the same time I am a tax justice campaigner, and tax justice requires that a person only pay the right amount of tax that they owe, and this new system does seem to have inherent within it the risk that demand will be made for tax that is not owing, and on the basis of incomplete or blatantly incorrect data.  That risk,  if it arises,  would be wholly unacceptable.

I do, therefore, suggest that HMRC need to step back very quickly from what I understand they are to propose. Firstly, that's because quarterly data will help no one. It simply imposes an obligation upon business to submit data which will be incomprehensible to HMRC as its user, and which will not give rise to any useful information that they can interpret.

Second, it has always been the case that a person's income has been determined over an annual period in the UK, and that should continue to be true. What is also the case is that we have always assessed people upon their net income, which is their total chargeable sales less their allowable expenditure incurred in the course of undertaking their trade, and it is vital that information continue to be submitted to HMRC on this basis if that is people wish to do (in other words, I accept flat rate reduction schemes may suit some people, but should not be imposed).

And, third, I make clear that the preparation of accounts that are meaningful, and which provide relevant, reliable, consistent, comparable, comprehensive and comprehensible data (these being the necessary conditions to be fulfilled if information is to form the basis for tax assessment) take time to complete and this must be permitted within the tax system or abuse will arise.  Anyone who thinks that such an obligation can be satisfied by simply entering transactional data into an app on a mobile phone is, frankly, seriously deluded as the nature of accounting, the judgements involved within it, and the qualities that are inherent in the information it should deliver.

So, I want the tax gap to be closed, and soon but if that is to be done then there are other ways to do it. First, the proposal I made in 2013 on information exchange with regard to banks regarding limited companies would be considerably more effective, faster, cheaper, and yield a higher return than anything that is likely to be proposed now in this quarterly data submission programme.

Secondly, any programme tackling the self-employed must be run in parallel with the programme tacking limited companies or the ability to get round the disclosure program will be available to anyone, and that would make it useless.

Thirdly, as anyone who understands anything about tax collection should know, the aim is to create maximum voluntary compliance at minimum possible cost to both the tax authority and the taxpayer. In the area of self-employment this is done by creating the greatest possible potential risk to the taxpayer of being found out, and penalised, if they do not declare their income appropriately. To achieve that goal all that is needed is that banks be required to supply information on an annual basis to HMRC on all accounts that they maintain on behalf of UK-based customers that appear to have irregular and sporadic deposits of cash that might indicate that the person in question is trading, or which indicates that they handle significant amounts of cash, or which comes from rental or other agents, implying that they have letting income. I do not think it is beyond the wit of any bank to create a risk assessment tool to make enquiry of its bank accounts to identify such data and to then supply it to the Revenue on a regular basis at relatively low cost. The obligation on the  bank would then be for them to disclose to their customer that they had advised HMRC of this information, and the obligation on that customer would then be to advise the Revenue as to what the account was being used for, and whether or not income not previously  charged to tax was being received. And finally, the obligation upon the Revenue would be to enquire of those people who did not respond, issuing estimated tax assessments if it was felt appropriate at that point of time to encourage the submission of information, as happened prior to the creation of the income tax self-assessment system against which the taxpayer would then be allowed to appeal based upon the promise of the supply of information within a reasonable time period.

Such a proposal has  a number of massively appealing qualities  completely absent from the Revenue's proposal. First,  it would be comprehensive, as any data sweep should be,  and which quite fundamentally the proposal made by HMRC is not, revealing how ill-conceived it is.  Secondly, it would be cheap, which is highly desirable.  Thirdly, it would impose remarkably little cost or inconvenience on the already compliant taxpayer, which has to be the aim.  Fourth,  it includes a reasonable follow-up process which does not presume guilt until the taxpayer has had the opportunity to explain their transactions.

I would urge HMRC to start again on this issue.

I am happy to meet with them.