Ths FT reports this morning that:
HM Revenue & Customs booked more than £8bn of extra tax from big businesses in the year to April, helping push up its overall yield from investigations 15 per cent to a record £23.9bn.
The UK tax authority said its "record breaking" compliance results were nearly £1bn ahead of the target set in last year's Autumn Statement and £9bn more than it raked in three years ago.
Anyone would think I should be celebrating, but I am not.
I am, of course, delighted when HMRC achieves results against tax avoiders and evaders. That has to be its priority. But there is a massive problem with these numbers and the clue to it is given in another part of the FT text (I assume it got an exclusive on the story, by the way, hence my willingness to quote):
HMRC said its compliance work had brought in more than £1bn from criminals and £2.7bn from tackling avoidance schemes in the courts.
In addition, it had protected the Exchequer from future tax avoidance by closing corporation tax and stamp duty land tax loopholes, it said.
It is expected to step up its efforts to bring in unpaid tax to meet a government target of an extra £24.5bn in the year to next April, and £26.3bn the following year.
So what we actually have, it seems, are relatively small tax recoveries and massive claims for the impact of new tax legislation in deterring tax avoidance and evasion.
Now I, again, have no problem with effective new tax legislation - which is why I propose it - but to claim this is the result of tax compliance activity is, to be polite, political fantasy and a PR department's figment of the imagination. That's firstly because legislation is parliament's responsibility and maybe HMRC should remember who it is working for and secondly, it's hard enough estimating tax gaps well (and HMRC are lousy at it) but it's nigh on impossible to estimate the impact of new legislation, whatever HMRC would like to claim. The result is that at best this number is simply made up and the whole basis of this claim is bogus.
I would like a tax authority in the UK that knows what it is responsible for and states facts, not fiction when it comes to news releases. Right now we have not got that, and on this particular item matters are getting steadily worse.
Such releases might appeal to the vanity of ministers. They might be used to justify cuts. But the truth is that they don't collect tax. Only people on the ground do that and they are having their jobs cut. That's the issue and HMRC are ignoring it. No, worse, they're trying to disguise the impact if those cuts.
How I wish for an honest tax authority.
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I read it as £23.9bn, of which £1bn comes from criminal cases and £2.7bn from avoidance cases in the courts, leaving £20.2bn from other investigations which didn’t make it to court. The BBC cites £8bn from large businesses, for example.
As the vast majority of cases don’t even get as far as Tribunal, that doesn’t sound too odd to me. No need to invoke “the impact of new tax legislation in deterring tax avoidance and evasion” at all.
Except they do
So I have commented
I agree no need: so why did they do it?
They’ve said £23.9bn from compliance activity, plus unquantified results from new legislation. It’s just basic marketing: you claim as much credit as you can, even if it’s only tangentially relevant and not really due to you.
As I say, I’d prefer honesty
As people (myself included) tend to blame HMRC for new legislation’s flaws, even though it’s Parliament’s job to make it, I can’t get too bothered when they take credit for its successes too 🙂
Honesty is a rare commodity in very short supply at the upper echelons of society.
I too would prefer honesty, because today it would amount to far more than a breath of fresh air.
The only “trickle down” I would like is the telling the truth however unpalatable it may be, but then “in a time of universal deceit – telling the truth is a revolutionary act”!
Truth is in short supply