Julian Knight: A creaking tax system puts our reputation at stake

 

How well the tax system works is probably as good an indication as any to a nation's stability and strength.

Just look at Germany and the Scandinavian countries – they have a highly efficient tax-collection system, while Italy and Greece, in particular, are basketcases.

It may be somewhat of a surprise to watchers, like me, of 24-hour news, but Britain has long had an international reputation for being a well-governed nation – that's why this summer's riots were such worldwide news. Our reputation has a lot to do with our tax-collection system.

Generally, in Britain, people declare their earnings and pay their taxes. It's not like Greece, which, according to its tax books, has only 10 millionaires, or Italy, where one in every €10 spent is in the black economy. So last week's news that up to six million Britons, through PAYE, have paid either too much or too little tax is worrying.

This isn't a little local difficulty, this is systemic failure.

The spin machine at Revenue & Customs is playing this for a good news story, the tax rebate to individuals could total £2.5bn, equivalent to nearly 1p off income tax. But it just confirms for me what I've been told by tax experts over the past few years, that our system is at best creaking and could just possibly be at risk of partial collapse.

There are simply too many tax codes and rules. Under Chancellor Gordon Brown tax rules trebled, and all sorts of variants to the tax code were brought in; HMRC has also had to announce it will take on 1,000 or so inspectors to replace those let go earlier. If HMRC is well-staffed, why does it take three months for it to acknowledge that it has even opened correspondence?

Staff are clearly trying to make the best of a bad job, but they urgently need more resources and a simplification of rules and coding. Or Britain will lose its reputation for good governance.

No deal

Speaking at a Building Society Association shindig on Thursday, Grant Shapps, the Housing minister, called for more 10-, 15- and 25-year mortgages. But, again, Mr Shapps, whose first act was to scupper plans to increase the rights of hard-pressed leasehold property owners against rogue managing agents, badly misses the point. Any major provider would tell him that the overwhelming majority of Britons don't want a very long-term fixed mortgage – and they're right.

In 2007 Nationwide offered a 25-year fix at 6.39 per cent. If you'd bought that you'd be spitting tacks; 10-, 15- or 25-year deals (with huge early repayment fees of up to 7 per cent) don't suit modern life – we want to be flexible. Understandably, independent mortgage advisers steer clear; they want us to chop and change and don't want to be held accountable for selling a deal which could cost clients a fortune if they get the choice of fix or float wrong.

We've been here before of course, Alistair Darling called for longer fixes in 2007, and before that we had Professor David Miles's report into the mortgage market, which did the same. But each time the politician or academic calls for these deals the industry and the public simply ignore it. I expect Mr Shapps's intervention to fall on similar stony ground.

PROMOTED VIDEO
News
Nadine Gordimer died peacefully at home yesterday
people
Arts and Entertainment
Neil Young performs on stage at Hyde Park
musicAnd his Hyde Park set has rhyme and reason, writes Nick Hasted
News
Women have been desperate to possess dimples like Cheryl Cole's
people Cole has secretly married French boyfriend Jean-Bernard Fernandez-Versini after just three months.
Arts and Entertainment
AKB48 perform during one of their daily concerts at Tokyo’s Akihabara theatre
musicJapan's AKB48 are one of the world’s most-successful pop acts
News
Ian Thorpe has thanked his supporters after the athlete said in an interview that he is gay
people
News
The headstone of jazz great Miles Davis at Woodlawn Cemetery in New York
news
Arts and Entertainment
Brendan O'Carroll has brought out his female alter-ego Agnes Brown for Mrs Brown's Boys D'Movie
filmComedy holds its place at top of the UK box office
News
newsBear sweltering in zoo that reaches temperatures of 40 degrees
Arts and Entertainment
Professor Kathy Willis will showcase plants from the Royal Botanic Gardens at Kew
radioPlants: From Roots to Riches has been two years in the making
Extras
indybestThe tastiest creations for children’s parties this summer
Arts and Entertainment
TV The follow-up documentary that has got locals worried
Arts and Entertainment
Paolo Nutini performs at T in the Park
music
Finacial products from our partners
Property search
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    SQL Developer

    £40000 - £45000 per annum + competitive: Progressive Recruitment: SQL Develope...

    Sales Executive - Central London /Home working - £20K-£40K

    £20000 - £40000 per annum: Deerfoot IT Resources Limited: Sales Executive - Ce...

    HR Advisor - 6 months FTC Wimbledon, SW London

    £35000 - £40000 per annum + Benefits: Ashdown Group: HR Advisor - 6 Months Fix...

    Information Security Manager (ISO 27001, Accreditation, ITIL)

    £70000 per annum: Harrington Starr: Information Security Manager (ISO 27001, A...

    Day In a Page

    Super Mario crushes the Messi dream as Germany win the 2014 World Cup in Brazil

    Super Mario crushes the Messi dream

    Germany win the 2014 World Cup in Brazil
    Saharan remains may be evidence of the first race war, 13,000 years ago

    The first race war, 13,000 years ago?

    Saharan remains may be evidence of oldest large-scale armed conflict
    Scientists find early warning system for Alzheimer’s

    Scientists find early warning system for Alzheimer’s

    Researchers hope eye tests can spot ‘biomarkers’ of the disease
    Sex, controversy and schoolgirl schtick

    Meet Japan's AKB48

    Pop, sex and schoolgirl schtick make for controversial success
    In pictures: Breathtaking results of this weekend's 'supermoon'

    Weekend's 'supermoon' in pictures

    The moon appeared bigger and brighter at the weekend
    Iraq crisis: How Saudi Arabia helped Isis take over the north of the country

    How Saudi Arabia helped Isis take over northern Iraq

    A speech by an ex-MI6 boss hints at a plan going back over a decade. In some areas, being Shia is akin to being a Jew in Nazi Germany, says Patrick Cockburn
    The evolution of Andy Serkis: First Gollum, then King Kong - now the actor is swinging through the trees in Dawn of the Planet of the Apes

    The evolution of Andy Serkis

    First Gollum, then King Kong - now the actor is swinging through the trees in Dawn of the Planet of the Apes
    You thought 'Benefits Street' was controversial: Follow-up documentary 'Immigrant Street' has got locals worried

    You thought 'Benefits Street' was controversial...

    Follow-up documentary 'Immigrant Street' has got locals worried
    Refugee children from Central America let down by Washington's high ideals

    Refugee children let down by Washington's high ideals

    Democrats and Republicans refuse to set aside their differences to cope with the influx of desperate Central Americas, says Rupert Cornwell
    Children's books are too white, says Laureate

    Children's books are too white, says Laureate

    Malorie Blackman appeals for a better ethnic mix of authors and characters and the illustrator Quentin Blake comes to the rescue
    Blackest is the new black: Scientists have developed a material so dark that you can't see it...

    Blackest is the new black

    Scientists have developed a material so dark that you can't see it...
    Matthew Barzun: America's diplomatic dude

    Matthew Barzun: America's diplomatic dude

    The US Ambassador to London holds 'jeans and beer' gigs at his official residence – it's all part of the job, he tells Chris Green
    Meet the Quantified Selfers: From heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor

    Meet the 'Quantified Selfers'

    From heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor
    Madani Younis: Five-star reviews are just the opening act for British theatre's first non-white artistic director

    Five-star reviews are just the opening act for British theatre's first non-white artistic director

    Madani Younis wants the neighbourhood to follow his work as closely as his audiences do
    Mrs Brown and her boys: are they having a laugh?

    Mrs Brown and her boys: are they having a laugh?

    When it comes to national stereotyping, the Irish – among others – know it can pay to play up to outsiders' expectations, says DJ Taylor