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Richard and the tax gap

This was prepared for elsewhere but not in the end used:

There is joy in heaven and sniggering down here upon Earth as Richard Murphy gets a jolly good spanking from HMRC over his quite lunatic estimates of the tax gap. You\’ll have seen him, heard him perhaps on the radio, popping up to claim that there\’s £120 billion that should be collected. Just collect that and all our economic and financial problems are over.

The full whipping is here in Hansard. As an example of the asininity of the Murphmeister\’s \”estimates\” try this:

The figure for unpaid tax of £28bn that Tax Research UK use is a snapshot of the total amounts owing to HMRC on a particular day. We think this gives a misleading impression of tax that is lost. Most tax paid late is collected within a few days, and over 90pc is eventually collected. Therefore the figure we include in our tax gap estimate shows only the amounts we don\’t ever collect. 90 per cent of this arises because of insolvency.

That is, the Murph claims £28 billion, but once we\’ve accounted for the people who pay late but do pay and those who go bust the actual unpaid tax unpaid is some £400 million. Less than 0.1 per cent of tax collected. I\’d be absolutely astonished to hear that any other organisation in the country manages to get its unpaid receivables down that low.

It really doesn\’t support his continued insistence that HMRC should double the number of staff it has. For, and here\’s the real story, that\’s what Murphy\’s ever more phantastical estimates of the tax gap are about.

Our story starts here, back in 2004, when Gordon Brown decided to merge the Inland Revenue and Customs and Excise to create HMRC. The point and aim of this was to enable the firing of some large number of the people in the now conjoined offices. Brown actually said this was the point. By 2006 there were 37,500 redundancies in the pipeline as duplication could be eliminated. Reducing the total headcount in HMRC by approaching 50 per cent.

Now, if you were the leader of the union that represented those taxmen what would you do?

Here I must wander off into opinion, supposition on my part. But I would look around for some vaguely numerate hack who was willing to take my union\’s shilling to produce reports proving that vast sums of taxation were not being paid as they righteously and justly should be. In each such report I would insist on a few paragraphs about how we really must stop this slaughter of the innocents and have tens of thousands more taxmen where they belong, sitting behind a desk sucking pencils and coughing up regular union dues.

Now that\’s what I would do because I\’m an evil manipulating neoliberal b\’stard. What they did actually go off and do, I\’m not sure:

Richard Murphy, a campaigner who calculated the £120bn estimate, rejected HMRC’s criticisms. He called on HMRC to increase staff levels and crack down on small companies that were not filing tax returns or company accounts.

Mark Serwotka of PCS, a union representing HMRC staff, said:
The tens of thousands of staff in HMRC know that Richard is not overstating the tax gap, and they know that as well as it being an issue of political will, the problem is one of staffing.

With 10,000 more job cuts planned by 2015, the government stands no chance of tackling this, when even a modest dent in the billions lost to our exchequer would change the debate about public spending overnight.

Quite which latin tag this falls under I\’m not quite sure: quis custodiet ispso custodes isn\’t quite it, perhaps cui bono is closer? Your evocations of ancient wisdom in the comments please.

12 thoughts on “Richard and the tax gap”

  1. Tim is being somewhat less than obvious about this, probably because of UK libel laws (but what is the truth is the truth).

    Richard Murphy is a paid shill of PCS, which is the union representing the vast majority of HMRC staff.

    He has also received payment from the TUC and to a lesser extent other left-wing activist and lobbying groups.

  2. It’s an interesting theory Tim. But surely if PCS had looked around for a vaguely numerate hack, they would have found one.

  3. But surely if PCS had looked around for a vaguely numerate hack, they would have found one.

    What in “the Civil Service union” makes competence the default assumption?

  4. “Richard Murphy is a paid shill of PCS, which is the union representing the vast majority of HMRC staff.”

    A union that’s looking to forge closer links with another biggie, UNITE, under Serwotka’s leadership.

  5. I used to be in a civil service union, don’t recall them ever being willing to back down from a fight, or from pushing harder than they should. Sounds like this time they’ve managed to secure the services of someone rather like ‘Comical Ali’ – anyone remember him from 2003 in Iraq? ‘There are no American tanks in Baghdad’.

  6. You’ve taken us through the bobbins-ness of his £28bn ‘unpaid’ tax, which is fine. But that’s not the slice of the pie that he’d employ loads of tax inspectors to sort out.. it’s a credit control issue. Or, as it perhaps turn out, a credit control non-issue.

    He really wants the extra taxmen to go and chase after all the small companies who do not file their returns. He thinks that’s hiding stupendous amounts of tax fraud. I think it’s hiding stupendous amounts of pointless paperwork.. but happen to agree that someone should probably check it out.

  7. If faced with Mark Serwotka and Richard Murphy standing before me, it would be incredibly hard for me to decide which of them to punch first.

    Probably on balance I would first swing at Serwotka, in the hope that it would knock him out so I wouldn’t have to hear that sanctimonious whining voice of his.

  8. Meh. You’re all stupid.

    And wrong.

    Ho hum.

    I await Worstall’s many papers circulating around mainstream thinking and wondering where and why everything has gone wrong. Oh, it hasn’t gone wrong, has it timmy?

    You’re all just doing grand!

    I see the light!

    I hope you all die soon.

  9. @ PaulB
    All my professional bodies have ethical standards that they require their members to respect. So PCS *could* look around for a vaguely numerate hack, but many of us would have given Mark Serwotka an honest answer, which wasn’t what he wanted

  10. If you’re going to try and patronise me, Spastic Weeble, at least get your French right.


    Now, about the tax gap….? You clueless cunt.

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