I argued yesterday that the UK government really does not want to collect tax from fraudsters operating in the UK, and would rather create an environment where fraud is easy to undertake than one where regulation can be enforced.
I will be recording on this theme for the BBC today when discussing the UK's failure to properly tariffs due on trade from China which is now resulting in a suggested fine of £1.7 billion from Europe. The suggestion made in that case is not that the UK made a mistake; it is that it simply could not be bothered to collect the tax owing.
And now Jolyon Maugham is bringing a case against Uber demanding a VAT receipt for a journey he made in a car provided by that company. He knows, of course, that he won't get one. Uber claims it does not provide taxi services, saying its drivers do that and it is a mere booking agency. But that claim is inconsistent with the facts, which have been upheld because Uber drivers have been found to be employees in a tribunal hearing. At the heart of this case is a simple allegation, that HMRC has not collected a massive sum owing by Uber in VAT because it has failed to properly appraise the facts in this case.
Are these cases all coincidence, or is there a conspiracy going on here? I suggest the latter, although I am well aware of the reaction that this will give rise to. The opinion is based on the attitude of Tory MPs. I well remember Jacob Rees Mogg arguing against Michael Meacher in the House of Commons on one of the Private Member's Bills I wrote for Michael. The aim of the Bill was to tackle tax evasion, which is money that is already due to HMRC. Rees Mogg's argument against the bill was that it would result in more tax being paid and that was undesirable as a matter of absolute fact, so it must be opposed. I was shocked but in a moment realised the true agenda. Upholding the rule of law to collect tax legally due did not matter. There are instead those in the Conservative Party, from top to bottom, who are more than happy with tax abuse because it means there is less money for government and that means that austerity and the policies of intimidation against so many in society that flow from it can be justified.
It is the same attitude that means HMRC is more committed to cutting staff than collecting tax.
And the same policy that means HMRC will not properly estimate the tax gap.
And it explains why we have a General Anti-Abuse Rule for tax, because it is politically expedient to do so, but it has never been used.
Come to that, this may be why Google did not pay the Google tax.
And this is not some minor issue: this drives to the very heart of what our government is supposedly about. If, as seems likely to me, it is being run by those with an interest in favouring big business whilst offering a light touch on regulation to all-comers with the intention of making sure that only smaller tax payers are compliant whikst at the same time using a lack of revenues as justification for cuts in spending that cause untold hardship but which are in fact wholly unnecessary then this is itself a government fiunded on what can best be described as fraudulent misrepresentation of the true economic facts. It will take a lot to persuade me otherwise.
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I work on corporate power and it’s always a hard one. You want to give people the benefit of the doubt, or the benefit of stupidity, but the weight of malfeasance starts to grind that away.
How was it when Labour were in power?
http://www.taxresearch.org.uk/Blog/2007/06/14/brown%E2%80%99s-decade-was-it-taxing/
Better
But not perfect
HMRC is indeed more committed to cutting staff than collecting tax.
To answer the question “How was it when Labour were in power?” In the 1990s there was a big Tory programme for closing tax offices and this was swept away by the 1997 election after which Dawn Primarola honoured a pledge to keep them open and look to make money from better enforcement rather than counter productive cuts.
Then in 2004 Gordon Brown decided it would get plaudits from the tabloids and shameful cheers form his back benches if he attacked civil servants, and the result was a closure programme which shut tax offices in many market towns by 2010. To his credit John McDonnell was outspokenly opposed to this.
After 2010 the vandalism of HMRC stepped up a gear with the Revenue abandoning the whole of Norfolk and its current plans to shrink from c140 to c17 offices involve abandoning the whole of East Anglia.
The “Building No Future” shows that HMRC is totally unconcerned about policing fair tax system.
Might you tell me – does HMc actually have a presence in Felixstowe now?
The Inland Revenue bit of HMRC has never had an office in Felixstowe. HMRC offices that have closed in Suffolk and around since 2010 include Clacton, Colchester, Sudbury, Witham, Bury, Chelmsford, Norwich and Yarmouth.
Ipswich is still open and just about the last office scheduled to close under “Building no Future”.
The Customs ad Excise part of HMRC had some of its work and staff transferred to Border Agency and these staff may be in Felixstowe, but there is no HMRC presence. There is an ex C & E presence in Harwich, but they are to close.
PCS is ringing alarm bells about the lack of HMRC presence at ports given that post Brexit all imports and exports will be subject to the more bureaucratic customs procedures rather than VAT.
I thought that was the case
Shocking….
Thanks
The American right wing have been doing this for years. They call it “starving the beast”.
Might be true for the ideological nutters like Rees-Mogg but I suspect for most Tories it’s about them and their mates/funders not paying much tax while dodging the consequences of austerity by living in cuts free areas like Sussex.
Rees Mogg sits on the Treasury Select Committee. He shouldn’t be ignored.
And this is why, despite overwhelming public support for change, the government continues to fight against increasing transparency in the Overseas Territories.
The aim is NOT to get more companies and wealthy individuals to pay more tax. The aim is to ‘lock in’ existing low tax payments for the rich, and possibly to lower further. But at the same time to make the problem of public perception of ‘tax abuse’ go away.
And all the time Conservative Ministers relay the line about the top 1% paying 27% of the total income tax, and no-one bothers to point out that this only illustrates how unequal our society has become.
How much of their income do the top 1% pay in tax, how much of theirs do the bottom 50% pay? These are the numbers than matter. Conservative Ministers never tell us this number because it shows that our tax system is regressive
https://www.equalitytrust.org.uk/how-regressive-our-tax-system
and becoming more so. This means that inequality will rise inexorably until the next crisis, just as Piketty says. But it does not have to be this way.
Until we elect some competent politicians, we will continue to endure not only their conspiracies but also from their innumeracy, as Martin Wolf summarises here:
https://www.ft.com/content/cd1c369c-84c7-11e6-8897-2359a58ac7a5
Agreed
Well, how does that square with the crackdown on IR35? From April, public sector organisations will be responsible for determining a contractor’s status – in or outside of the rules.
The background: ‘IR35 is the United Kingdom anti avoidance tax legislation designed to tax “disguised employment” at a rate similar to employment’. (Wikipedia). This is of course going to be applied to all organisations eventually so the exodus from public to private sector will not help them for very long.
My experience of working in the civil service was that 80% of the bodies were contractors. This was a long standing situation, (10 or more years some folk had been there as a’temp’), and suited the management down to the ground as it reduced the headcount and associated managing/HR aspects.
Back to the point, policing these 10s of thousands of contractors will take a lot of manpower.
Make it look like the little guys pay and they might believe the big ones do too
That is the policy
I agree with everything you say, especially the bit where you say Uber drivers have been found to be employees, and the tribunal hearing saying they were ‘workers’ is being challenged by Uber itself. And the continuing austerity with the government spending only £1.07 for every £1 collected in taxes despite record tax receipts.
We cannot on the one hand berate the wealthy for loving money and being willing to aggressively avoid paying tax, and on the other behave as if they will meekly pay extra taxes just because we mandate it.
Surely we must accept that they are either going to sit still for higher taxes (in which case we must cease demonising them) or accept that they will take avoiding actions we cannot prevent (in which case what’s the point)?
Are the rich (in aggregate) selfish moneygrubbers, or generous heroes – we must make up our minds before acting.
Personally, I believe they have shown themselves repeatedly to be the former (even those most vocal on the Left have been caught agressively avoiding taxes for goodness sake!) and so I do not expect any serious attempt to tax them more heavily to succeed.
In the final analysis, the person that decides whether a tax is “fair” is the person being asked to pay it.
I have to admit your linear view does not accord with anything I see in the real world
Hi Richard, I can understand them wanting to protect tax abuse, so as to lower the tax of their ‘class’ and if austerity and the destruction of government ensues, so be it, but austerity as an aim in itself?
Sorry for asking what seems like a stupid question, but why would these people want to encourage austerity? Are they all sociopaths, psychopaths or what? (And mind you it has been argued that many of our CEOs and politicians are likely psychopath). This could probably make a blog post in its own right. 🙂
Regards
Anthony
Austerity undermines the service which reaches breaking point
People lose faith in it
The government then privatises it as ‘the only solution’
Tax revenue then effectively goes to the private sector
It is a thesis I explore in The Courageous State
“Are they all sociopaths, psychopaths or what?”
Absolutely.
Although you omitted the vital word “greedy” from your list.
This is symptomatic of a great failing on the part of decent people; they simply can’t imagine others being utterly venal, especially when those others already have so, so much.
But for some, there is never such a thing as enough – and the fear of losing *any* of it is enough to propel them into carrying out and supporting some truly vile policies.
Sadly, I suspect the world was ever thus. But what is staggering is that, even though we can now vote against this kind of greed, tragically, we continue to vote *for* it. Unbelievable, really.
I’d beg to differ having seen a lot of them close up in my consulting days, as I’m sure has Richard. It’s a topic I’ve often discussed with friends/colleagues including one who is a fully trained psychologist. We concluded that there are undoubtedly a lot who you’d have to classify as sociopaths, some verging on psychopath. I saw a lot in the City and at the top of a certain large accounting firm. However there are a significant group who are not and who try to run decent businesses in the face of extreme pressure from the City. That pressure tends to reward the sociopath and discourage or sack those who behave like normal competent human beings. It absolutely encourages greed and excessive rewards just because they can get them
If you are a straight anti-capitalist then the generalisation is convenient (no offence intended). If on the other hand you are after a rather different form of capitalism to the one we have now then I’d argue that the decent ones are on our side. They have no problems with issues like the environment and sensible regulations because they think longer term and want a level playing field. They are unlikely to be Brexiteers. The more we distinguish between them, supporting the good ones and unsparingly attacking the bad, the stronger our case
Morning
So as I understand this, Uber, for some unknown reason are not registered for VAT!!!
I own a substantial chauffeur drive business, so getting away from the politics, you’re saying that Uber don’t give vat receipts because they “don’t do the job”!!!!!!!! Therefore not registered for vat.
They are a booking agency, they take the money, they pay the drivers and I assume they make a margin. I also assume the size of Uber’s London market alone they must turn over more than £84k being the vat threshold. So what are they doing to get away with this, because immediately I’m at a 20% disadvantage. And if those London drivers aren’t earning, especially the good ones over £100,000 a year, then you’re right, something is wrong.,
They are VAT registered, of course
But they do not charge VAT to the end customer – only on their charge to the driver
Their claim is that the drover makes the sale
I do not agree
But I doubt anyone working for Uber makes £100,000
First of all the drivers have to be honest with HMRC because they are electronically paid, ie no cash, that’s the process and business model. In London black cab drivers can earn, easily over £500 per day. Retrospectively Uber charge more than black cabs. Uber drivers tend to be people who want to do serious hours and in return earn serious money. Remember they have to supply their own car, insure it, tax it, TFL licence it and biggest expense of all, fuel. They have to earn at least £2000 a week. After expenses, HP on the vehicle, they are left with about £1200 per week, after tax and NHI, they’re left with about £800-£900 per week…..in London, I’m no economist here, but that’s the deal and there’s something wrong, because they’re competitors and it’s an issue, as I’ve said, I’m at a 20% disadvantage here!!! From a Tory nut-job as one of your contributors once called me.
I think you are wildly optimistic
Suppose they work a fifty hour week
You are saying they get a £20 fare every half an hour?
Come on…..
Umm, you misspelled Conscious in your heading; something I often do – a bit like spelling the as hte as I type in haste. However, this gives me an opportunity to explore the word a bit more, in relation to “good work”. I teach my students that there are four states that are arrived at on the journey to effective service. They are all to do with competence and consciousness, viz. Unconscious Incompetence, Conscious Incompetence, Conscious Competence and Unconscious Competence (otherwise known as mastery).
The politicians have arrived at a fifth: Consciously unconscious incompetence. A good example is policy led evidence, which is the current Tory M.O.
🙂
And typo amended: thanks
Wherever one looks across government at the moment one is seeing policies that fly in the face of evidence. Tax, health, education, international development (my own particular interest), renewable energy – I could go on. And thats before mentioning Brexit. Is it really possible that they are proving incompetent in so many areas? It seems unlikely and so the narrative that suggests that it is all quite deliberate and reflects an underlying extreme right wing government makes sense. Though I’d usually suspect cock-up rather than conspiracy.
As an aside, Richard and fellow bloggers might enjoy a Tweet that came through to me today in response to one of my own:
From: Andrew Kinsman @kinsman_a
@robin_stafford For real unhinged lunacy see the pot-addled postings at CiF. Or the Stalinist nutters at @RichardJMurphy’s tax bollocks blog
When people like Richard and ourselves are seen as Stalinist nutters, we know the observers really have fallen off the far-right hand end of the spectrum!
Kinsman worked for a UKIP MEP, just to contextualise that
@ Robin Stafford
Don’t worry. When commenters resort to insults and ad hominem arguments, you know you have won.
I was highly amused. If that character thinks we are a bunch of Stalinists then he a) has no idea what Stalinism is and b) is so far to the right he’s off the edge. Both consistent with being a Kipper.
It is a recurring pattern in my experiences that Kippers in particular and Brexiteers in general rarely come back with rational responses and more frequently resort to abuse. I suspect a piece of research would confirm that
JOHN HALL†@john_hallw · 6m6 minutes ago
 More
IS THIS A CASE WHERE THE NORMAL TAX PAYER AS A GROUP COULD SUE POWERS THAT BE THROUGH THE COURTS
THE GOV TAX OFFICE IS GUILTY OF DICRIMINATION AGAINST THE POOR IN ITS TAX COLLECTION PROCEDURE
I do not think so
Sorry…