How extraordinary

Ritchie says:

This is quite extraordinary. Until the TUC published my report entitled ‘The Missing Billions’ in February 2008 we know from published documentation that HMRC paid almost no attention to this issue.

That published documentation being the report that shows that HMRC had estimates of the tax gap from 2004.

Four years before Ritchie\’s report.

No, really:

But in 2004 HMRC did some preliminary work, which was heavily based on assumptions and experience in other countries, to provide a broad handle on the range in which the gap might fall. This work, which is the subject of the FoI, estimated the overall tax gap as lying in a range of £ 11-40bn p.a. (including £5bn-15bn being attributable to avoidance) – see attachment for details. The methodology was not robust and that is basically why we resisted the FoI request, but the overall figures at 4-16% of total tax yield were broadly consistent with the 8-13% that has been calculated in other countries.

But look at that very interesting little bit at the end. Ritchie tells us that the tax gap is £120 billion.

Total tax take this year just gone was £500 billion or so. So Ritchie is telling us that the tax gap is 24-25% of the amount raised.

And yet calculations of other countries (and thus leaving aside whatever it is/isn\’t that HMRC does right or wrong about their calculations) are of 8-13%. £40 billion to £65 billion.

Who are we to believe on such matters? The assembled tax authorities of the world or a retired accountant from Wandsworth?

Interesting poser that, really.

3 thoughts on “How extraordinary”

  1. “Who are we to believe on such matters? The assembled tax authorities of the world or a retired accountant from Wandsworth?”

    Not the best argument, as ‘authorities’ can be vulnerable to group-think and have their own professional interests to protect — e.g as with climate ‘scientists’ and their consenus that global warming is manmade. You need to add a rider after ‘a retired accountant from Wandsworth’ something like ‘with a spectacularly poor record of reliability in such matters’. The issue is less his being in a minority (even of one) and more his appalling track record.

  2. The tax gap is easy enough to establish: Look at what Brown was borrowing once he got off the Conservative spending plans.

    Since the Revenue started pushing their plan for centralised deductions and (some time ago) increased the volume of their ‘avoidance and evasion’ propaganda with such things as the offshore disclosure project, I have come to suspect they were telling Brown how much they should be collecting and how much they were collecting and promised that the difference would disappear if he allowed them to bugger about with taxation and the running of the Revenue (it really is a massive pile of arse).

    Pie in the sky stuff unless they were to *really* simplify taxation but that is utterly against the very core of their thoughts.

    Imo the lower estimates of the gap compared to the actual borrowing Brown did are close enough to be more than coincidence. It would explain why Brown borrowed when times were good thinking the money would eventually be collected.

    Just scratching around the HMRC website I’ve found a few mentions of tax gap stuff. It was sufficiently insignificant it made it into the technical nots of the2005-2008 Public Service Agreement. It was also of such small regard that it was mentioned at two HMRC meetings in 2004 and 2005. From those three documents it looks to me like closing the tax gap was quite a major theme of Revenue operations after the Inland Revenue and HM Customs had been mashed together.

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