OUTLOOK: Either give HMRC the budget to pursue tax dodgers or ask less of it

 

Outlook The Public Accounts Committee is angry, very angry, at HMRC's failure to prevent tax dodging.

HMRC must, it declared, be more aggressive in its prosecutions of major multinationals. It must ensure no more "unintended consequences" emerge when it changes tax rules (er, but if they're "unintended" you don't usually spot them first). It must demonstrate how robustly it has dealt with miscreants. It must do more to grab cash from Swiss bank accounts. And so it goes on.

The committee is right to be frustrated at the failure of our tax collectors to be able to plug every loophole and grab every penny squirrelled away from the Treasury's paws. But it is wrong to lay the blame so entirely on the taxman's lap.

HMRC is, after all, an organisation which we ask to fight the cleverest, highest paid tax lawyers and accountants in the world. Men and women who are paid fortunes to beat the system by the richest people and the biggest corporate entities on the planet.

And what do we give our humble taxman to take on these dodgers? A shrinking budget and salaries that would barely cover the average PwC partner's après ski this Christmas.

In the autumn statement last year, HMRC was told it would not face any cuts in its budget so it could focus on raising more from the tax evaders. Six months later, it was ordered to slash £100m off its 2014 bills. Simultaneously, it was told to raise £1bn more in taxes.

And in this month's Autumn Statement, it was ordered to raise £3.7bn more in avoided tax by the end of the 2015. On top of that, more loopholes were closed to raise billions more. Great news, but where was the extra money for HMRC's bowler hats to go about collecting it?

The biggest problem with the way we treat the taxman is the outlandish predictions politicians put on how much tax their anti-avoidance plans will raise. Year after year, they massively overpromise, leaving the HMRC constantly looking lazy, incompetent or both.

The fact is, we have to be more realistic: either we give the taxman the budget to pursue his investigations or we ask less of him.

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