According to HMRC over just 5 years UK small business got 31% more honest. How likely is that?

Posted on October 18 2012

The latest tax gap data from HMRC offers some amazing statistics. Take this table on the dishonesty in the tax returns of self employed people in this country:

Staggeringly, in just four years the self employed people of this country got 31% more honest as the number putting in fales tax returns fell from 53% to 37%.

I'll ask you a simple question, which is, how likely do you think that behavioural change is?

I'll ask you an alternative question, which is how likely do you think this is just not true?

And then I'll ask do you think this has anything to do with the fact that HMRC have reduced the number of employees available to chase tax cheats from 100,000 in 2004/05 to about 65,000 now with the number set to fall still further and that therefore the increase in the number of honest returns is an indication of the fact that not enough people with not enough time are available to check what's going on?

I think it's that last one. But you decide.

If, however, you agree with me that this is anthropologically exceptionally unlikely you have to come to one further conclusion, which is that they're just making this stuff up.

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3 Responses

  1. stephen says:
    October 18 2012 at 6:02 pm

    What I find fascinating is that if small businesses are becoming more honest is why it is my own experience that there has been a significant increase in retailers etc, wanting to offer me VAT receipts even when it is pretty unlikley that I have a genuine business purpose for such reciepts. Perhaps it is just that I have become likeable?

  2. ian says:
    October 21 2012 at 9:11 pm

    I thought that Table 6.4 was calculated in the same way as in all the previous years – based on the ‘random enquiry programme’. Has that been restricted by changes in HMRC staffing levels?

    • Richard Murphy says:
      October 21 2012 at 10:14 pm

      You will note no data is given this year

      Evidence already released shows number of cases has fallen dramatically

      And easier ones will be resolved in less time with lower error rates

      May have to do freedom of information requests