TaxWatch is an investigative think tank shining a forensic light on who pays tax, who doesn’t, and why
Tax gap long read: what should we learn from multinationals about how to tax billionaires?
HMRC wants to offer the wealthiest taxpayers a dedicated tax ‘concierge’ service to help them pay their due taxes. It argues that this individualised and cooperative approach has already worked with large businesses, helping to end the bad old days of multinational tax avoidance.
But in fact the ‘tax gap’ is quietly rising for both large businesses and the wealthiest individuals. The new ‘wealthy compliance plan’ needs to draw the right lessons from large business compliance. These include the need for credible sanctions regimes to create the right incentives for cooperation; and the potential benefits of ‘country-by-country’ financial disclosure for billionaires as well as multinationals.
The best spent money in Whitehall?
New figures show that HMRC’s efforts to make taxpayers pay the right tax brought in £22 for every £1 spent last year. That’s exceptional value for money. Nonetheless beneath the headline numbers there’s a more complicated story about how HMRC’s tax compliance efforts are changing.
Not just vape shops – the small business tax gap
According to HMRC figures released this week, small businesses are underpaying £37bn of due tax every year – roughly the replacement cost of Britain’s nuclear submarines. But this giant figure, already driving resource decisions, rests on an analysis of just 337 tax returns. And much of the missing tax may be accountants getting tax returns wrong, not high-street criminality and deliberate tax fraud.
The tax gap seems to be getting worse – and by more than we thought
HMRC’s latest figures present a very different picture to previous years. The amount of due taxes going unpaid may be £6 billion bigger than previously thought — and going up, not down. Any incoming prime minister (or Chancellor) will have to go faster and further to tackle tax non-compliance if they want to stick to current spending commitments, let alone introduce new ones.