Ritchie still doesn’t understand the tax system, does he?

Taking into account the figures he has provided for debt, penalties imposed, cash paid and bad debt written off the amount that must have been waived each year to make the system balance must have been as high as £260 million; a figure in excess of the penalties imposed in any year.

It is impossible to believe that the write off of this sum resulted from appeals from companies who were so bad at corresponding with HMRC that they had already neglected to submit their corporation tax returns: it is obvious that HMRC do waive corporation tax penalties despite the Exchequer Secretary’s claim to the contrary. The sums in question have fallen but still amounted to over £70 million in each of the last two tax years.


This is the same bloke who, two days ago, said this:

The tax liabilities of any company that has failed to submit tax returns to HMRC should be made the personal liabilities of the directors of the company and all its owners who have more than 25 per cent of the share capital as well as the company itself. In this way the limited liability of companies would not permit deliberate tax abuse, as it does at present, because those responsible for that abuse would become personally liable to make payment of any sums they have defrauded;

Companies House should not be allowed to strike off a company until that company has supplied accounts covering all its periods of trading;
HMRC should be required to object to the striking off of any company whilst tax returns and tax liabilities owing by it remain outstanding;

It’s just amazing to see him being incapable of putting the two together.

The simplest explanation of his first set of numbers is in his recommendations there.

HMRC asks for accounts from and then fines lots of companies that don’t provide them. Those that continue not to provide them get struck off. At which point the fines die: because there is no company there anymore to demand them from. This is why he recommends that a company not be struck off until it has filed and paid the fines.

But when he wants to whine about how the fines aren’t paid he entirely ignores what he’s quite obviously aware of.

Strange man really.

3 thoughts on “Ritchie still doesn’t understand the tax system, does he?”

  1. “HMRC should be required to object to the striking off of any company whilst tax returns and tax liabilities owing by it remain outstanding;”

    HMRC *already* does this, but if mum’s the word from the company, and there are no company assets at the registered office (often the accountant’s offices) what can they do? Eventually Companies House say ‘sod this’ and strike off anyway. Would Ritchie have thousands of ghost companies remain on the register racking up fines to artificially bolster the tax gap calculations …. oh, wait…

  2. HMRC routinely “waive” penalties, or rather withdraw them when we point out that they should never have been imposed in the first place. In fact the vast majority of the penalties I see are incorrect: HMRC forget that a company is dormant, or that we’ve told them that the period of account has changed, or whatever. I note that in the Parliamentary answers the amount listed as penalties imposed is the gross number, including all the erroneous ones, so I’m not at all surprised that the amount collected is a lot lower.

    I haven’t worked through the numbers properly, but I suspect that there may also be some double-counting in there, as Murphy is including the amounts brought forward in the “to be collected” figure each year. If you add the amount paid of £108m to the irrecoverable amount of £945m, you get rather more than the £946m total amount levied…

  3. Pellinor

    I suspect Murphy’s numbers involving throwing darts at a board or using his fertile imagination to think of a number then multiply it by whatever the government is spending on health, transport, and so on. This, then, in his mind becomes the ‘tax gap’. It’s utter rubbish but won’t stop the Unions and Greens from quoting it ‘ad nauseam’ – happily, he could only get coverage from sockpuppets at those organizations and the Guardian, Indy and Mirror (so the three collectivist/Stalinist papers)so his influence may be on the wane. He really does need a thorough fisking and debunking, though -any volunteers?

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