Law firm Pinsent Masons, who appear on occasion to double as HMRC's PR agency, have been doing so digging into HMRC's data on the yield from tax investigations. As they note as a result:
HMRC recovered an additional £97 for every £1 spent on new staff for its large business compliance service last year. Units responsible for investigating individual high net worth taxpayers and small businesses also reported significant increases in tax take, according to the figures.
The claim is based on HMRC's suggestion that they secured £5.9bn in extra tax from investigations into large businesses for expenditure on compliance staff of just £61 million.
The suggestion is also made that local compliance units, which handle smaller businesses, and the high net worth unit, which is responsible for the tax affairs of wealthy individuals, collected an additional £18 for every £1 spent in 2013/14.
Now I have to be honest and say I have real doubts about HMRC's claimed recoveries from their compliance work, which extend well beyond cash settlements into projected future savings, where subjectivity is an issue and where the NAO has found errors in past claims by HMRC, but for once let me take HMRC's own claims at face value. In that case three questions arise.
The first is why HMRC are not investing more in this process. Despite claims to be increasing compliance investment I am aware that HMRC's own staff do not share the view that this is happening.
The second is why HMRC are not training more people for this activity, which is largely undertaken by a cohort of older tax inspectors, many of whom are approaching retirement.
And third, there is the obvious question as to why more is not being spent on securing the front line data, especially on SMEs and other small businesses, to identify the best targets. It is readily apparent from the fact that many hundreds of thousands of small companies are allowed to get away with not submitting tax returns each year that this is not the case.
All such perceptions lend support to my view that HMRC is not being properly managed and its performance is not being properly appraised. Without a minister responsible for the department there is also a lack of accountability for the department. It's my view that we need an Office for Tax Responsibility to properly hold HMRC to account for its work. When the potential yield is so high, and the current investment in it so pitifully small, that would make complete sense. After all, if £61 million can supposedly raise £5.9 billion what could £120 million do? Not another £5.9 billion for sure, but by itself no other action could reduce the deficit more cost effectively or provide better benefit for society. The time for change at HMRC has arrived.
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“the fact that many hundreds of thousands of small companies are allowed to get away with not submitting tax returns each year”
Richard, you seem to think that if you keep repeating the same old nonsense over and over it will eventually be accepted.
It is quite simply not a fact.
Many hundreds of thousands of companies are not REQUIRED to submit tax returns because they are dormant and HMRC want to avoid the pointless bureaucracy of processing hundreds of thousands of nil tax returns.
Can you name even one prosecution case where a company claiming to be dormant and not submitting tax returns has been charged with evading tax? No you can’t.
Do you have any evidence at all to back up your claim?
It’s just another wild accusation with nothing to back it up.
The only place “hundreds of thousands of companies” are evading tax in the manner you suggest is inside your head.
There are no prosecutions because there are no investigations
And your claim is as wild as the ‘there are no tax evaders offshore’ claim of a decade ago because it was impossible to prove the point due to secrecy
And it is not true that all such companies are not asked for returns: 300,000 or more companies a year asked for returns do not submit them
I have evidenced my claims: it is you who is making stuff up
Geoff, it’s you who seems to think that if you keep repeating the same old nonsense over and over it will eventually be accepted.
Nick
Not a hope of that
I seriously wonder why people like Geoff bother here
Does anyone pay them, I wonder?
Nick
I’m happy to be shown evidence that supports Richard’s claim that there are 300,000 companies evading tax (Richard has previously claimed the number was 500,000 and that the sums evaded were £16bn).
I’ve previously asked why someone evading tax would bother to draw attention to themselves by registering a company and then draw further attention to themselves by failing to submit accounts to Companies House and HMRC but have yet to recevie a coherant response. It’s a bit like believing that bank robbers would register their proposals at the local police station before commencing work.
So, Nick, do you have any such evidence?
Or are you just believeing what you want to hear?
I have revised my evidence, as you should know
The basis of revision was changed facts
But you clearly can’t even be bothered to check what I write
For failing to note any evidence and merely offering time wasting comment your time here is over
Geoff
even by your standards, this is a peculiarly foolish comment.
Why, you say, would those that want to evade tax notify the authorities by setting up a Co ?
Erm, because they want the enormous benefit of a Company, that of limited liability. If I trade as John Smith, roofer, & I charge you to repair your roof & do a rotten job, once the rain comes in you can come back to me & try to sue me for every penny I have. Conceivably, I might lose the roof over my own head, since you could demand back everything, requiring me, in extremis, to remortgage or sell my own house to meet the damages.
If, by contrast, I’m John Smith (Roofers) Ltd, the maximum you can claim back from me is what is in the Company, which if I’m well advised, won’t be much. If anything.
Now, Geoff, I can hear your next argument. “Why bother setting up a Co in reality? You could just say you were a co”. Yes you could add the word ‘limited’ to your name without actually registering at Co house & you could even make up a false CRN. Co House have many faults but they do have a good website, so anyone that deals with you can easily check if you are a ‘real’ Co or not. In any case, it costs like £25 to set up a Co legitimately, why bother faking that ?
Finally, Geoff, I don’t know your background but I can safely assume it isn’t an accountant. Look at Accountingweb, who’s members are not always, I’d say, completely in agreement with Richard, & you’ll see diatribes about this particular matter.
Accountants, often right-wing in their views, say over again that their decent, legitimate, small business clients are undercut by shysters who set up a Co, trade for 6 months, pay no tax or NICs, leave their creditors & employees high & dry, start up a new Co & start again. Your remark, Geoff, that this is all Richard’s fantasy is so bizarrely odd that I honestly wonder if you.re the same fellow that claimed Birmingham was 100% Muslim, still, inshallah
E
Thank you
HMRC aimed to recruit 250 graduates last November for tax specialist training programme.
It recruited 234 people in 13/14
https://www.gov.uk/government/publications/hmrc-annual-report-and-accounts-2013-to-2014.
200 joined programme in 12/13.
https://www.gov.uk/government/publications/annual-report-and-accounts-2012-13–3
And how many did the Big 4 recruit?
More than that by some way each
I rest my case
“I rest my case”
So now you’re claiming that recruits at the Big 4 are part of the tax evading 300,000 company scam?
Otherwise the two facts are wholly unconnected as far as tax evasion is concerned.
Except of course in your head.
I was referring to a resource imbalance
Only you can gave made such an inappropriate connection
Your paranoia suggests you are wasting my time
Expect to be deleted from now on
If true, and I have no reason to doubt thme, these figures represent a massive return on investment. Two points come to mind.
Firstly, I wonder if the DWP publish equivalent figures for the pursuit of benefit fraud and how they would compare.
Secondly, with the neo-Thatcherite urge of this government to privatise all that moves, why haven’t they offered this service out to a third-party to run? I’m no fan of privatisation, but if we go along with the right-wing philosophy of the power of the profit motive, I can imagine there would be a long list of companies, charities and other bodies more than willing to take on this work given the massive potential returns.
The Board structure of HMRC might suggest what you suggest is not far away
Thank you Richard for highlighting this.
I think those figures of £97 and £18 are ones that need to be shouted from the roof tops in the election campaign.
I will be.
Agreed
From my experience as a former HMRC officer the easiest way for business to evade tax is just not to notify HMRC of your existence and not register for VAT – so you have a 20% automatic advantage over those businesses who do notify. The resources put by HMRC into the “hidden economy” are minimal, those staff who do remain are too busy dealing with the businesses that they do know about !
Precisely
An important point to note here on dormants is that many corporate groups have shed loads of UK dormant companies in their groups. A lot of these are historical leftovers (companies used to protect trade names that are no longer needed, acquisition vehicles, etc.) that may have £1000 of cash offset by £1000 of share capital. The way these are dealt with is for the stat accounts to be sent in to HMRC and if there is no movement from the previous year then there’s no tax to pay. Even some of the other companies where, let’s say there is an outstanding inter-company receivable with interest income (not strictly dormant I know) will have a very simple CT return with group relief surrendered from another company in the Group, so no UK CT payable.
There are a lot of these dormants around due to the principal difficulty of getting rid of the damn things (either by liquidating or strike off) as it takes a lot of effort, time and wasted cost. Most corporate groups try hard and have a program of getting rid of dormants, but the enthusiasm wears off after a while as there are other more important priorities. The vast amount of HMRC paperwork that any company (dormant or not) generates from HMRC (two copies of everything when an “agent” is appointed) is staggering.
I allow for at least a million dormants in my stats
Not a hope of that I seriously wonder why people like Geoff bother here Does anyone pay them, I wonder?
I’m afraid I’m only a very irregular visitor here but I could readily become much more frequent.
This may be a naive question but is there any evidence that people are paid to come here and how does one enrol?
There is evidence of paid commentary on the web
Thee is no direct evidence here