Pay your tax

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The Guardian has reported that:

Growing numbers of people and businesses are avoiding or delaying paying taxes as the "credit crunch" bites, the National Audit Office says in a new report.

The increase comes against the background of a doubling of consumer debt leading to people avoiding paying their tax bills, says the report.

The auditors estimate that up to 1.5 million working adults had a personal or business tax debt in April this year - and expect the figure to rise. The total number of debts has already risen by 22% over the last year - from 13 million to 15.8 million.

As worrying is the fact that the report notes that:

HMRC collected around £450 billion in 2007-08 in tax and National Insurance contributions from the UK's 35 million taxpayers, ranging from individuals to large multinational corporations. In March 2008, £21.5 billion was outstanding on its debt management systems. £17.3 billion was in outstanding tax, interest and penalties whilst the remainder was overpayments of benefits and tax credits.

And yet the report also notes:

In 2007-08, HMRC's Debt Management and Banking directorate collected around £310 for every £1 spent, an increase of 10 per cent on the year before. But HMRC cannot reliably measure the relative cost-effectiveness of different debt collection activities.

Just not good enough, I say.

And it is ludicrous that HMRC is still cutting thousands of jobs in debt recovery. That is a policy that has to be reversed. It makes absolutely no economic sense at all.