MPs warned: “Tax gap set to widen”
Tax officials have warned a committee of senior MPs to expect an upsurge in avoidance and a widening tax gap if planned cuts to tax collection budgets go ahead.
The Association of Revenue and Customs (ARC) - the union representing senior managers in HMRC - has told the Treasury sub-committee that proposed budget reductions could undermine HMRC’s ability to identify, prioritise and prosecute those guilty of tax avoidance.
Graham Black, ARC president, said: “It is no coincidence that total revenues are falling at a time when HMRC has suffered significant staffing reductions.
“HMRC is made up of world-class tax professionals and the government must realise that we need to invest in HMRC and our staff, to claw back the money that should be helping to beat the deficit.”
HMRC has already suffered staffing reductions, from 99,179 staff in 2004-05 to 68,037 in June 2010. The spending review announcement of a further 15% cut in expenditure will further erode staff capacity, and their ability to close the tax gap.
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So morals, integrity, and professionalism...
... have no part to play in "keep[ing] people honest under self assessment, especially with the very high rates of tax now in play for higher earners"?
What a sad state of affairs.
Start by sacking the bosses
HMRC bosses are simply fighting to retain their little empire. It reminds me of the sketch from Yes Minister when Sir Humphrey says that the importance of a department (and therefore its bosses) is measured by the size of its budget, not by its efficiency.
If compliance was more focussed, with a heavy slant towards large scale tax avoidance, then these cuts would lose little if any revenue. Unfortunately, HMRC still tend to go after the little guy who cant fight back, whilst letting the big fish get away with murder as usual.
Really?
"HMRC is made up of world-class tax professionals"
*raises eyebrows*
It is however crazy to be making cuts to compliance visits.
The fear of getting caught is the only thing to keep people honest under self assessment, especially with the very high rates of tax now in play for higher earners.