The National Audit Office published theÂ followingÂ key facts in its report onÂ H M Revenue & Customs's management of marketed tax avoidance schemes:
I hate to say it, but I think these facts are misleading.
First of all, the figure for individual tax avoidance in HMRC's latest tax gap estimate is Â£2.1 billion. It was Â£1.9 billion in 2009-10, they say. They do not give an avoidanceÂ figureÂ for small companies, but total losses to them are only Â£1.4 billion: by no means all of that can come from theseÂ schemes any more than all the losses from individuals can. If that were true the enormous losses from other tax avoidance (let's start with IR35 arrangements, for example) would simply not be in the data at all. But if we attribute half of the HMRC acknowledged losses toÂ marketedÂ schemes we still come up with, for this sector, Â£1.75 billion of losses attributable, according to HMRC, to such schemes annually. However, with Â£10.2 billion at risk that is 5.8 years, onÂ average, Â of losses still to deal with. And the DOTAS scheme, under which such losses areÂ identifiedÂ has only been doing since 2004. That means so far 75% of all identified losses have not yet been addressed.
That's not enouraging, is it?
Nor is the fact that if you do a simpleÂ calculationÂ - dividing Â£10.2 billion by 41,000 - you find that the average sum lost per schemeÂ participantÂ is a staggering Â£248,780.
Now, let's put this in perspective. A senior tax inspector can earn around Â£60,000 a year - although many earn less. HMRC's accounts show that, at most, staff costs were only half of HMRC spending in 2011-12 (although their accounts are designed to make that as hard to find out as possible). So total overhead costs included a taxÂ inspectorÂ costs Â£120,000 a year. That's half the tax lost to each one of these cases.
Now, doesn't that mean thatÂ employingÂ a rather large team of tax inspectors to tackle this problem makes sense?
Why isn't HMRC doing it?
And why, if as the NAO admits, total losses to tax avoidance are much more than those agttributable to such vases, isn't HMRC allocating considerable resource to other abuse as well?
Surely the time has come when the glaringly obvious fact that we can't collect tax without employing enough people to do it has to be recognised?
And at the same time, why not recognise the real true scale of the problem?