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Making hay while sun shines
istock_mykola_sosiukin_making_hay

Civil servant cuts would be a boon to tax evaders

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If Boris Johnson’s plan to cut 20% of civil servants is extended to HMRC, which is already missing every performance target, this will surely help tax evaders to make hay.

19th May 2022
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Anyone who has even dabbled in the world of tax is aware of the Taxpayers’ Charter. From our point of view, this is a helpful document that gives taxpayers a degree of protection against bad behaviour or errors of judgment on the part of HMRC.

While he may not have actually enshrined anything in writing, Boris Johnson now appears to be in the process of creating what we might regard as a Tax Evaders’ Charter, effectively removing the few remaining but decaying teeth that his taxing authority still retains.

Much of this story is going to seem very familiar. Older practitioners will remember the days when you could call the local tax inspector on what we would now describe as a direct line and have a mature chat about the best way to deal with a client’s affairs or a specific problem. Gradually, a degree of centralisation took over, meaning that major problems might be addressed with specialists but, more commonly, we were out on our own.

It might be unkind to point the finger at a single man, but George Osborne was particularly keen on cutting costs wherever possible.

A case of neglect

If you were to ask the typical accountant to describe HM Revenue and Customs today, the answer is likely to include terms like “automated”, “call centre” and “lack of communication”. Contact with a highly trained expert would not come into the conversation.

As a result, the average taxpayer has probably concluded that they should try to get their tax right – which isn’t easy even for highly trained accountants given the ever-increasing complexity of legislation – but the chances of being investigated or audited by a tax inspector are extremely low.

An obvious manifestation of what ought to be regarded as neglect on the part of government has come with a series of frauds, most recently in connection with amounts doled out as a result of coronavirus.

In keeping with many other attempts to defraud the Exchequer, the powers that be decided pretty quickly that unless amounts could be recovered very easily, they were happy to cut their losses and write off most of what should have been a recoverable debt. What kind of message does that send?

It is also an established fact that HMRC has lost most of its experienced staff, while morale among those who remain sinks lower by the month.

Double whammy

In case anyone wondered, the department’s employees are civil servants.

Pleasingly, they are now the victims of a contradictory double whammy from senior ministers of state.

First, Jacob Rees-Mogg, ever keen to bash anyone but his pals, started leaving sarcastic messages on any desks that were unoccupied. Presumably, this included those of staff who were off sick, on holiday and maybe even deceased.

Those messages made the minister for marketing Brexit’s distaste for anybody who works from home all too clear. As we have discovered, there might be the occasional slacker, but most of our staff who have been working from home do more rather than less. In addition, homeworkers are far less likely to catch Covid on the Tube or in the office, which might lead to a week or two away from work while they recover.

Having discovered one cabinet member who thought that civil servants were not achieving enough, it took only a couple of days before the prime minister himself weighed in. Oddly, Mr Johnson started the debate by explaining that he hasn’t the attention span of a gnat, constantly dipping off to the kitchen for cheese and coffee when he should be saving the country.

Cunning plan

Secondly, in yet another carefully conceived plan, BJ blithely announced that the civil service should cut 20% of its staff as soon as possible, which equates to the loss of approximately 91,000 employees.

You can understand this one a little better, bearing in mind that so many of the civil servants working at 10 Downing Street and the Cabinet Office are criminals who break the rules that they invent with alacrity. According to the papers they appear to spend most of their time swilling booze and snorting coke (insert as many allegedlys into that sentence as you deem appropriate).

This cunning plan was designed to take advantage of natural wastage, followed by sacking as many as necessary who were still left at the end of the day.

If I were a veteran civil servant with valuable skills, then a combination of disgust at the sarcastic messages from one minister and a lack of respect from another would lead me to become part of the natural wastage.

Move to the dark side

Extending the example to someone currently working in a senior role at HMRC, the opportunities to increase pay by a massive percentage by moving to the dark side and joining an accountancy practice that was struggling with recruitment would be irresistible.

This is actually even worse than it sounds for HMRC, given that not only would they be losing a valuable resource, but a direct competitor would be using it against them.

In case anybody reading this article still doesn’t think that cutting HMRC staff by 20% is stupid, it is worth recalling the figures in a recent report by the House of Commons Public Accounts Committee. They noted that for every additional £1m spent on staffing, the average payback is £18m. That might sound good but if the money is better directed, in this case by retaining the highly qualified investigative experts looking into big-ticket corporates, that multiple increases so that the average payback is several times higher.

If the Johnson plan is put into effect, the upshot is that tax evasion will be even more likely to succeed. You couldn’t invent it.

Replies (8)

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By AndyC555
19th May 2022 17:19

"Jacob Rees-Mogg, ever keen to bash anyone but his pals"

"bearing in mind that so many of the civil servants working at 10 Downing Street and the Cabinet Office are criminals"

Any self awareness in the author I wonder?

Thanks (4)
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By Hugo Fair
19th May 2022 19:10

Even if all I wanted was leftist diatribes, I'd prefer to read the Guardian which at least is prepared to shine the searchlight on both sides of the political spectrum - see Tue 24 Sep 2002:

"The Inland Revenue yesterday admitted that it sold its entire property portfolio of 600 buildings to a company based in a tax haven, despite a Treasury crackdown on tax dodges in offshore islands.
It said an announcement last year that the properties had been sold and leased back from a UK company was made in error.
It confirmed the deal had been signed with a firm that was based and paid tax in Bermuda."

So St Gordon also presided over "criminals who break the rules that they invent with alacrity" and who, despite being natural strangers to the truth, needed to burnish their ability to say the opposite thing a few days after an initial announcement (without of course admitting to having lied).

And then there's PFI ... invented by the Tories, but adopted and accelerated (with glee) by the Blair governments - with particularly egregious impact on both the NHS and the state Education sectors (supposed bulwarks of Labour's soul).

A plague on both their houses ... but even more on those who inflict these snidey non-facts on us.

Thanks (3)
Replying to Hugo Fair:
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By Justin Bryant
20th May 2022 09:22

Yes. Shame on Awebs editors for allowing such a poor quality piece to be published here in the 1st place. It's pure rot and makes RM look good.

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Replying to Hugo Fair:
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By More unearned luck
20th May 2022 15:07

The flogging off of tax offices was a scandal. So too was the fact that the purchaser was an offshore company. The latter point may have been contrary to government policy, but was it against the criminal law? The IR may have been stupid but I doubt that they were criminals.

The cause of PFI was government accounting. If the government had used GAAP rather than cash accounting then the disguising expenditure by using PFI wouldn't have worked. Companies have for years been obliged to capitalise assets acquired via finance leases.

A perennial compliant on this site is HMRC tardiness. Cutting HMRC numbers won't make our lives easier.

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Replying to More unearned luck:
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By Hugo Fair
20th May 2022 15:31

I wasn't arguing for (or indeed against) cutting HMRC numbers ... although they'd do better IMHO to do neither whilst re-focussing (and re-skilling) to generate an increased Tax take from a supportive set of taxpayers and a happier workforce.

Nevertheless, thanks for the points on which you've expanded.
No wonder the government doesn't seem to understand the accounting world.

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By ireallyshouldknowthisbut
20th May 2022 09:16

its mind crushingly stupid to not put money into enforcing tax collection or all you are left with is the thin calculator line of accountants and a reliance on basic honesty and general civic decency of the tax payers to collect taxes.

Honesty and civic decency is of course a complete anathema at the top so why its taken for granted at the bottom I really dont know.

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By listerramjet
20th May 2022 09:57

Surely you have to address whether the civil service is efficient in the work it does. I am sure this will be different for different departments, but it is a valid question.
However the big question Boris should answer is whether the tax system as a whole is efficient. It is certainly complex, and the cost of collection is large. The right way to go about this would be to simplify the tax system, thus reducing the effort required to collect. Thus reducing the headcount required. Difficult to fiddle rules that no longer exist!

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By loraine99
20th May 2022 12:19

"If you were to ask the typical accountant to describe HM Revenue and Customs today"

Broken!

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