Taxation magazine published an article yesterday on the tax gap by Ed Hagger, a deputy director of H M Revenue & Customs. The article is behind a firewall so not accessible to most people. Suffice to say that it is, to some extent, a re-hash of the last four pages of HMRC's submission to parliament in May when they specifically described my work as dangerous.
As Hagger puts it in this new article::
Academics and members of the accountancy profession have argued, most recently during the Treasury select committee hearing on the administration and effectiveness of HMRC, that the tax gap should exclude avoidance and that therefore HMRC's £35bn estimate is too big.
Meanwhile, campaigning group Tax Research UK has calculated a tax gap of £120bn.
How do we use our tax gap estimates? Why we are confident that our figure is about right? Why is £120bn way off the mark?
Thereafter somewhat more than half the article is dedicated to saying why I'm wrong, which I could just brush off as either amusing or flattering, but it's something more than that, so it's worth thinking about.
First, it's very odd for any government department to spend so much time rebutting the argument of one individual. It was strange that they did it to parliament; it's as strange that they're now doing it in one of the tax profession's favourite rags. Why is that? Could it be that they're seriously rattled?
Second, if they were seriously trying to engage in debate why haven't they asked to see me to discuss this issue? They could, at any time, and they know I'd go, and what is more that if they asked me to not talk about doing so I wouldn't: that happened countless times before 2010. So what are they frightened of in seeing me face to face? And why have ministers like David Gauke, who has to have approved this article (there's no way it would have come out without ministerial approval) so persistently refused to meet me?
Third, why if HMRC are serious do they ignore all the counter arguments I've ever put forward to their suggestions, not least about my work (where many of the claims they make are ridiculous, at best, and worthy of Tim Worstall at worst)? Many of those counter arguments are here.
Indeed, fourthly, why can't Hagger even manage to specifically reference my work - once - in what he says despite there being 14 footnotes (0ne to my blog, generically)? Has he actually read what I've written?
Fifthly why does Eggar ignore the fact that the EU has now endorsed my work on tax evasion - which happens to concur with the work he's criticising?
But perhaps, most tellingly, why does Hagger end his article saying:
Further work is under way to establish more robust measures including all elements of the tax gap, and we would welcome engagement with the academic community to progress our understanding of this difficult but important problem.
If he's so keen to understand why isn't he in discussion with me, the Tax Justice Network, the TUC, PCS, and others, all of whom disagree with him?
And why is the budget allocated to this supposedly crucial task so small? I gather it's just £15,000.
Finally, if it's so hard to measure the tax gap, why is he so sure he's right and I'm wrong? Or is it just - as I think - that this is a mighty big game of bluff being paid here by HMRC to deny the reality that they're vastly more inefficient than they claim - and that's because of the massive spending cuts that are decimating the department and its effectiveness?
Given Hagger's refusal, and the refusal of his bosses, to engage in real debate I think that's the real motive for their misinformation - in which case I'll more than happily continue to expose just how absurd HMRC's politically motivated estimates are.
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Personally, my view is that your own “take” on this, if anything is on the cautious side. So when you suggest potential dangers in policy making based on a very restricted view you are rightly pointing out the risks involved. As someone given to the opinion that what cannot be seen may be more important than what can be seen there is a lot out there which has “gone missing” from the figures but which has a substantial impact on reality.
I suspect you are hitting them where it really hurts! Their spurious credibility. Long may it continue.
Most people in or related to government are running scared now. Many are deeply corrupt and there’s a hand getting closer to their collars. They know it too.
The tax gap has been around since presumably tax was first thought of but I think everyone would agree that it has got bigger and bigger over time. To simplify things let’s assume that the problem has worsened considerably over (let’s say) the last twenty years. Why have all governments of whichever party (and I’m not making a political point here) ignored it?
That to me is the most worrying question because the answer has to be either it benefits them or it benefits their masters (whoever they may be).
Mr Murphy, although you appear to believe that HMRC should engage with you in a discussion as to the nature of the tax gap is and how large it is It is surprising that you do not realise why your efforts in this area are not taken too seriously. For example to support your position by referring to the views of PCS and TUC is in part referencing yourself, to use a famous example, it is like buying another copy of the Times to confirm a story you read in the first copy, a pointless exercise. Secondly, you appear to include within your ‘definition’ of tax avoidance arrangements that HMRC do not include in its and are not within the intention of Parliament, for example, the non UK domicile tax laws. As you know these were significantly reviewed by Parliament within the last five years and Parliament decided that certain advantages should remain. If you disagree with Parliament that is ok but then surely your complaint is less about HMRC’s measurement of the tax gap (in connection with for example non UK domiciles) and more the changes that you would like in the UK tax code. Possibly a different type of debate.
At present you appear to complaining that HMRC are using a round ball (playing football) and you are outraged (and being paid for being outraged) because you think that HMRC should be using a different shaped ball and playing rugby. In such circumstances it is very difficult to have a useful discussion.
If HMRC were not taking what I said seriously they would not put so much effort into trying to rebut it
Your argument fails at the first hurdle since you fail to take facts into account
Og, and Galileo once upon a time had to quote himself too. It’s how change happens.
“In such circumstances it is very difficult to have a useful discussion.” Yet… here you are. Why?
In fairness – I deleted his reply
It was more of the same drivel and he’s repeatedly failed the moderation rules so I saved everyone’s time and effort by simply deleting yet more pointless diatribe from him
“… one of the tax profession’s favourite rags”
Thanks Richard, much appreciated!
Mike Truman
Editor, Taxation magazine
That’s OK
Said with affection