I have posted this video on YouTube this morning. In it, I argue that over the last ten years or so, our tax authority has closed the vast majority of tax offices in the UK. No wonder we are not collecting large parts of the tax the country is owed. It's time these offices were reopened.
The link is here, just in case.
The transcript is as follows:
HM Revenue and Customs, our tax authority, should, in my opinion, be present in every single town and city of the UK. But it isn't.
When I started work as a tax practitioner in the 1980s, there was literally a tax office for almost every London borough, and every single UK city had one or more of what were called tax districts.
In every one of those districts, there was somebody called a district inspector. A person of great experience who understood the local economy of that area and knew who the rogues were.
There was a great advantage to having those officers. The knowledge that those local tax inspectors had, let them identify which accountants could be relied upon. And which couldn't. Which people were by and large reliable, and those who seemed to be spawning lots of dubious businesses. They could also know that there were problem sectors in their economy which were peculiar to the area. For example, in a fishing port, there would be a particular problem with fishing boats. Unsurprisingly. And they could have expertise in those in a way that, well, another area would not.
There was something else about having those local tax officers, which was really important. The local tax office could also provide taxpayers with face-to-face help. Quite literally, you could go in and say, “I have no idea what I'm doing. Can I please be assisted by you to fill in my tax return?” Or “Can you help me with understanding this piece of paper you've sent me”, or whatever it was. The taxpayer knew that they could get support from somebody who looked like a human being. That is no longer true.
In fact, it's not even true that for much of the year now, HM Revenue and Customs is planning to have tax office helplines open. I know they've relented at this moment, but they haven't guaranteed they're going to keep those helplines open forever.
So, what we've moved to is a situation where literally the Revenue was seen to be present in the communities who were being expected to pay tax, and was there to provide people with assistance so they could do so, to a situation where now the Revenue is in around 14 large offices around the UK, and some people live literally hundreds of miles from tax offices.
People in Cornwall, have a very long way to travel if they want to get to Bristol, which is their nearest tax office. People in the Shetland Islands are nearly 400 miles from their nearest tax office in Edinburgh or Glasgow. Now those are extremes maybe, but it's also true there isn't a tax office in the whole of East Anglia.
There is there one in North Wales. This is ludicrous. People can't get help, and unsurprisingly there's a consequence.
Over the last few years we have seen the amount of tax going unpaid by small businesses in the UK skyrocketing. 30 per cent of the tax liabilities now owing by small companies in the UK aren't paid. That's according to the Revenue's own figures.
They say it's only 18 per cent with regard to self-employed people, but frankly I think they're being optimistic there because it's not very long ago that that figure was also 30 per cent and I can't see why it's changed. So vast amounts of tax is not being paid.
I believe that if we spent £1bn more a year on reopening local tax offices, which would increase the costs of running HM Revenue and Customers by 20 per cent per annum, from £5bn to approximately £6bn a year, we would however collect an extra £10bn of tax, simply because that local knowledge would guarantee that local inspectors would know where to get it.
And, those people who need help would also get the assistance they require.
Why wouldn't you spend £1 billion to collect £10 billion extra in tax? That's my question. And I don't understand why they won't do it.
It's time the Revenue was seen back in our towns and cities.
There is more on this in chapter 15.4 of the Taxing Wealth Report 2024.
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So very true, and HMRC (formerly Inland Revenue) staff were rightly proud of the service they provided to the general public. Anyone could walk in to the public counter and get help with self employed tax queries, PAYE, complex CG issues, letters received, etc. They could talk to the very experienced clerical staff or get referred to an inspector. As for local knowledge, what the DI, the inspector S, and the Black economy RE didn’t know about between them wasn’t worth knowing. Also a shout out to visiting VAT staff who knew their ‘patches’ and all the businesses on them. So much was lost when local offices were closed.
Agreed, entirely
Off thread again. Apologies.
BBC Radio Scotland GMS interviews Anas Sarwar MSP, Leader of Scottish Labour this morning. Asked if Natalie Elphick MP should be in Scottish Labour? Stumped. He thinks it for her to explain. It isn’t. It is for Sarwar to explain. That is what he there for.
On actual policies, and the tendency of Labour already to roll back its promises, Sarwar says he is going to “road test all of our policies to destruction in opposition”. He is going to ….. What?
Think about that. How do you road test your policies to destruction in opposition? You can’t. You are not in Government. All you can do is talk. Talk, as we all know is cheap. Labour should know. They have done their share cheapening it. Sarwar is a blether.
There you have it. Scottish Labour. I find it quite difficult to believe that sufficient Scottish electors will be foolish enough to forgive Labour long enough to help out Starmer to form a Transferable Conservative Government.
John, I salute your determination to listen to Good Morning Scotland despite the damage it can do to your mental health in the early morning!
In the forthcoming General Election we have on the one hand Starmer’s Labour and its Scottish “leader” contradicting each other while failing to present coherent policies to remedy the mess the UK is in. On the other hand we have the Tories whose belief in destructive ideologies has wrecked Government services such that most of the organs of state are now broken and ineffective. Today the Tories’ so-called Prime Minister Sunak has defined somewhere north of 50% of all Scots as “extremists” on the grounds that they would prefer our native land to be independent of the decaying UK. That’s the language of colonialism.
One of these 2 parties will rule the UK after the forthcoming General Election, but neither of them will permit Scotland’s secession and will claim that there is no legal provision for any secession. Yet they call the UK a “democracy”. If Sunak would just confirm that Scotland is a colony, we could demand the right to secede and the right to hold a plebiscite to demonstrate majority support for secession at the United Nations. It would be a darned sight easier to leave the UK than in the supposedly democratic UK where the politics are designed to make it impossible.
Apologies for being off-topic.
The pair of you are forgiven
“Why wouldn’t you spend £1 billion to collect £10 billion extra in tax?”
Politics. Read all about it: “gov to employ a load more tax inspectors.”
Some people will know they are not paying the right amount of tax & will be keeping their fingers crossed.
Others may have made a mistake.
Any gov employing lots more tax inspectors will make part of the population (voters) unhappy.
Personally? if I was the gov, I’d quietly fund more tax collectors, not say anything and off we go.
Ain’t going to happen with the tories or LINO. Not a chance.
Because they offer the benefit of face-to-face communication for people who need help, they would be valuable for small businesses or people worried they have made a mistake. So even if they are there to do inspecting, calling them “Local Tax Advisors” or “Local HMRC Support Staff” might garner political support.
Surely we cannot be too far away from the reintroduction of tax farming.
Pay the government a big enough bribe and the West Midlands, Tyneside or Lancashire could be yours, with as much corruption and profit-gouging as you can manage, as long as you regularly come up with the contracted sum.
The Environment Agency has been equally evicerated to ‘save money’. The real reason was to ensure that there’s no authority around to ask too many questions of private enterprise – water companies & farmers – pouring sewage into our rivers. The Guardian’s George Monbiot has been documenting this betrayal of duty for years e.g.:
“Bodies like the Environment Agency have coped by mirroring the dodgy strategies of some of the water companies, massaging the figures to make it look as if they’re doing their job. Instead of properly auditing the water firms, the agency has allowed them to “self-monitor”. Self-monitoring is to monitoring what self-esteem is to esteem. When the companies award themselves top marks, the Environment Agency records this as a real result.”
https://www.theguardian.com/commentisfree/2024/apr/26/england-water-companies-shareholders-dividends-river-sea
The same attrition has been going on in many other segments of our public services, with similar losses of efficiency. Courts and police stations in particular. These ‘rationalisations’ all carry heavy costs, just not so easily quantifiable as the HMRC ones that Richard mentioned. It all comes down to the corrosive idea that the civil service is there not to help and support the public but to oppose and beat us. The UK really has lost the plot!
When I started in self-employment about 15 years ago, there was a tax office in Stevenage which were very helpful. They even provided short courses in managing your tax affairs. Now I can barely get hold of anyone on a phone.
I’ve worked in IT for nearly 30 years and I find their website difficult to navigate at times. I can imagine how non-IT people feel.
I agree
Their instructions are far from clear if you are not exactly in the situation they imagine
Of course, if the whole damn tax system wasn’t so complex in the first place……
A complex society requires a complex tax system
Richard,
Yes and no
There is bound to be an element of ‘Rough Justice’ but I suggest that there is a lot to be said for Peels idea of Criminal Law and applying it to tax making the Tax Code simple and easy to understand.
As it is of course we end up with Jeremy Clarkson buying a farm to reduce his inheritance tax liability………
Couple that perhaps with some stringent anti avoidance rules.
And so you get complexity….
There is a sizeable chunk of the tax gap that relates to evasion by SME companies, who now view HMRC as a distant entity following the large scale office closures under BOF.
Co-incidence…? I think not.
The recent government announcement of £51m to fund HMRCs customer service is to be welcomed, but is a drop in the ocean compared to what’s needed.
Agreed
Thank you and well said, Richard.
Until about 2000, my native Buckinghamshire had tax offices in Aylesbury, High Wycombe and Milton Keynes. I temped in Aylesbury and Wycombe. The offices no longer exist. Buckinghamshire and Bedfordshire are served by an office in Hemel Hempstead.
One keeps hearing that a minimalist state is needed to attract investment and spur entrepreneurship. https://www.reuters.com/world/europe/france-gets-16-billion-foreign-investments-part-choose-france-event-2024-05-13/ shows that claim to be nonsense. France has hundreds of thousands of people employed as inspectors for tax collections, employment rights, building quality, environmental health, food standards, pricing controls etc. One notices the difference in the quality of life and how this is increasingly an attraction for investors.
I was in the last Post Office in Frome which closes shortly along with the last bank and the Council Customer Service point
Our Tax Office closed a while ago
Basically the Government and certain businesses are withdrawing from large parts of the country
What’s the potential consequences?
The freezing of people out of support
The end of communities
You can’t price that
Thank you to John Boxall above, especially with regard to the tv presenter.
Such investments, not just here*, have long been favoured by banksters. The moment a bankster is able to move his / her bonus out, cash and / or shares, he / she does as he / she does not trust his / her employer / colleagues.
It’s not just the Phil Collins fan. An electrical appliance manufacturer has done the same. It’s making life difficult for many farmers or aspiring farmers.
You may remember the spike in food prices soon after the 2008 crisis. Much of that was due to financier speculation fuelled by cheap money. Then BoE official Andy Haldane tracked all that, but was powerless to crack down as politicians were, as they are now, in thrall to Big Finance.
I think you’ve answered this question many times. The question being why is the UK run this way? Because our politicians of both parties believe in neoliberal ideology. It’s an ideological belief that the state must be pared back to a minimum. HMRC is part of the state. The issue isn’t let’s have more HMRC offices but when can we have politicians who are pragmatic and not ideological? Is the UK capable of reversing corruption (principally of the lobbying system but others too)?
In my view I see no evidence anywhere that it is capable.
Last year I had Income Tax Inquiry about a client Tax Return involving CGT. The correspondence went on for some 9 months with the Tax office somewhere in Glasgow. I am based on the South Coast ! Eventually I got frustrated with dealing with a “Revenue Officer” that I tried to speak with an Inspector who might know what the legislation showed. No one available at the office I corresponded with. I tried to visit a local office of which there is one or so I thought. I arrived without an appointment because they do not have a telephone number. I was greeted at the entrance door by a Security guard to whom I explained that I would like to speak to an Inspector. I was told that no one was available and that the office was not open to the public. It seems to me that it was like trying to get into a Fort Knox and so I was effectively escorted off the premises.
After much correspondence with the “Revenue Officer” and quoting the various Tax Acts and Cases , and after many hours of expensive professional time I won the case.
This is very common
My last big case lasted five years. It ended with no penalties owing.
Just came across this.
https://www.thebureauinvestigates.com/stories/2023-09-30/just-11-wealthy-people-prosecuted-for-tax-fraud-last-year/
Just 11 prodecutions against the wealthy tax evasion last year. No point writing a taxing the wealth report. They’re not serious about enforcement.
Agreed
Richard, it takes years to train a Tax Officer, less time for a VAT officer but still significant. Rebuilding local tax capability will take years. BTW same on a smaller scale could be said for the Veterinary Officers who locally knew their patches in terms of farms, abbettoirs etc. All gone due to cuts with IT or the Digital Revolution or Risk all cited as reasons why they are not needed. The Damage done since 2010 by the small govt devotees in the Tory party has been huge.
Accepted, but unless you start you get nowhere
And they could recruit from the private sector….
One of the central tenets of the Building Our Future project (which HMRC, in Freudian fashion, called BoF – the lack of emphasis was stunning) was that HMRC’s largely crumbling estate could be replaced with brand new, state of the art city centre accommodation in our largest cities, which would cost less. As I pointed out to my union colleagues at the time, that proposition was utterly implausible, unless the new office buildings were very much smaller than what HMRC already had. Unsurprisingly, this turns out to be the case. Whilst it was always going to be possible to make economies by combining the IR and HMCE, this programme has gone way too far, and HMRC is now critically understaffed. Plus, the new offices are too small for all those nominally stationed in them, and if everyone went to the office on the same day, 40% of them would have to be sent home. So the “woke” idea of HMRC officers working at home, so derided by conservative observers and Conservative MPs, isn’t so woke after all, it’s an inevitable consequence of the contraction of the office space.
Ironically, whilst shrinking the estate like this, the budgets for travel & subsistence came under attack. Another easy target was training. Taxes training in the IR and its HMCE equivalent was gold-plated (necessarily, given your valid observation that our tax system is complex), but that is not true of HMRC these days. It has an enormous skills deficit, caused by not providing staff with the right training, in the right form, and often not at the right time.
I agree with your conclusion that HMRC’s estate needs to reach back out into the country, and as observed above, this will be a long term project. Senior HMRC leaders will tell you the department doesn’t need offices in sleepy market towns or fading seaside resorts (or even cities the size of Middlesbrough, Norwich or Sheffield). One day back in the 1970s the DI of Gainsborough District got a letter he didn’t entirely follow. That was how Ramsay started…
Nice sting in the tail there….