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What Is TwentyTimes Worse Than a £1.7 Billion European Surcharge? The Tax Gap!

29th Oct 2014
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While many readers will have been as outraged as David Cameron at the "unexpected" European surcharge it pales into insignificance when compared with the tax gap.

Judging by recent comments from government ministers and other politicians, the discovery that Britain is expected to pay Europe an additional £1.7 billion for the pleasure of membership might just tip the balance should an EU referendum ever take place.

Make your own judgements on that call as this columnist really doesn’t want to get embroiled in some rather dirty politicking.

However, it is striking that at almost the same time, the 2012/13 tax gap figures were published. These hit a mind-blowing £34 billion or more than £1,000 for each taxpayer, enough to buy one of those expensive stereos referred to last week.

Apparently, the tax gap represents 6.8% of tax liabilities although certain pundits reckon that the deficit could be three times as high as published figures. That would make it equivalent to a hefty 20% of the tax that we actually bother to pay.

Considering the fuss that HMRC makes about the success of its targeted anti-evasion and anti-avoidance strategies it seems strange that these figures continue to grow.

However, on the basis that the Revenue is constantly losing good staff and reducing numbers, it does seem a classic case of politically-motivated managerial failure, probably at a much higher level, dare one suggest in the corridors of power at Whitehall.

The breakdown is fascinating and saddening in equal measure. It reads as follows: –

Criminal attacks                                  16%    £5.4 billion

Hidden economy                                 17%    £5.9 billion

Legal interpretation                              13%    £4.5 billion

Evasion                                              12%    £4.1 billion

Avoidance                                           9%     £3.1 billion

Non-payment                                      13%    £4.4 billion

Failure to take reasonable care             12%    £4.2 billion

Error                                                   8%     £2.9 billion

It is hard to know where to fire the first shots. Should one be angrier about the definite illegalities that are allowed to continue such as the first, second and fourth items on the list?

Then again, that mysterious term “legal interpretation” probably hides a combination of perfectly legitimate behaviour and conceivably some further stretching of loopholes beyond reasonable bounds. Similarly, depending on the exact definition, avoidance might also contain wrongdoing.

Combined, in a mere twelve month period that little lot, comes to about twenty times as much as the European Union is requesting as a catch up payment for a dozen years of mildly incorrect accounting.

The last three items on the list may seem more innocent but they are still costing us £11½ billion.With all due respect to the Treasury and HMRC, why are we allowing almost £3 billion of our hard earned income to be wasted due to someone’s error?

Whether this represents errors by our esteemed taxing authority or by taxpayers matters little. In either case, they should be easily remedied and this figure should be close to zero. The same applies to those who failed to take reasonable care or just don’t bother to pay their taxes.

Followers of this column may well have seen similar articles in the past spluttering about the government’s squandering of incredible sums of money that are rightfully yours and mine. However, as the statistics only get worse there seems no reason to apologise for taking up the cudgel yet again.

While David Cameron clearly enjoys emitting ever-increasing amounts of anti-European hot air in giving his equivalents across Europe a further opportunity to snigger very literally at Britain’s expense he seems to be achieving little.

Instead, perhaps he might wish to expend rather more energy on helping his colleagues to recover sums that appear to have been lost through cost-cutting at HMRC (the same applies to his predecessors before anyone suggests that this column is becoming political).

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By User deleted
29th Oct 2014 16:21

Size – millions are mere bagatelle …

Try trillions instead

Now if we are in a size competition then how about looking at the EU & UK un-funded pensions

UK

Public sector: £1.7 trillionState pension: £3.8 trillion

http://www.taxpayersalliance.com/economics/2014/03/unfunded-pension-liabilites-17-trillion-time-government-admitted.html

EU Total - $39 trillion

http://www.bloomberg.com/news/2012-01-11/europe-s-39-trillion-pension-threat-grows-as-regional-economies-sputter.html

 

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By ShirleyM
03rd Nov 2014 08:05

Do the government really care?

It seems not, else they would do something about it! Getting power is all that counts, and you can always blame the 'other side' for the misfortunes.

Note: this applies to all political parties, past, present and probably future.

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