The leader of the British trade union and the CEO of a prominent retail company have united to urge the government to implement stricter measures in catching affluent tax evaders.
Paul Nowak, the TUC’s general secretary, and Julian Richer, the creator of the Richer Sounds hi-fi chain, stated that the public is missing out on potentially £36 billion in uncollected taxes from companies and individuals.
Before next week’s budget, a joint intervention was made by the chancellor, Jeremy Hunt, who is expected to prioritize pre-election tax giveaways. They cautioned that HM Revenue and Customs does not have enough funding to pursue businesses and wealthy individuals for non-payment, avoidance, and evasion.
Hunt has been urged to increase funding for HMRC in order to significantly improve its ability to conduct investigations and enforcement cases. This is necessary to reduce the tax gap, with estimates suggesting that up to £20 billion is lost due to serious violations.
“It is a matter of national outrage,” stated Richer to the Guardian, while being interviewed alongside Nowak at the TUC’s Congress House in central London. “We are particularly frustrated by those individuals taking advantage of government funds. This is a personal issue for me and I am truly appalled by the current situation.”
“We are pursuing individuals who receive benefits but fail to make payments – we have allocated funds for that purpose. However, we are not directing those funds towards this issue? This is completely unjust and the majority of the public are being deceived by this lack of action.”
Throwing the weight of the union movement behind calls to boost HMRC’s resources to chase businesses and wealthy individuals for unpaid taxes, Nowak said: “This is a no-brainer. From a fairness point of view, to support our public services, and to make sure people pay their fair share.
“Our members fulfill their tax obligations as it is not a choice for them. HMRC does not exercise leniency. However, we are seeing a significant amount of money, worth tens of billions of pounds, being misused instead of being allocated towards essential areas such as education and healthcare.”
The leader of the union and the wealthy owner of a business referred to statistics which showed that HMRC’s tax gap, which is the difference between its projected and actual tax revenues, rose to £36bn in the previous year.
Although a portion of the figure can be attributed to simple errors or negligence, the TaxWatch thinktank, funded by Richer, has found that £20 billion is a result of more severe offenses such as illegal assaults, tax evasion, legal arguments for non-payment, concealing economic activity, and avoidance strategies.
The independent regulatory organization, founded by Richer due to frustration with the flawed tax system in Britain, reported a 20% decrease in compliance audits by HMRC since before the pandemic. This is due to insufficient funding for conducting checks and low morale among employees.
A recent report, using data from the Bureau of Investigative Journalism, revealed that the HMRC fraud unit has decreased its number of investigations into offshore, corporate, and wealthy taxpayers by over 50% in the past five years.
According to Nowak, the budget for HMRC has essentially remained stagnant despite a significant increase in workload due to investigating Covid-related fraud. This has resulted in burnout and decreased efficiency as employees are overburdened and not adequately compensated.
“He mentioned that addressing certain instances of misconduct regarding the allocation of Covid relief funds caused them to overlook the larger issue of tax management,” he stated.
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The current administration appears to have little concern for enforcing their own regulations, especially when it comes to individuals contributing to their election campaign.
The TUC and TaxWatch argued that it would be beneficial to invest in HMRC, as calculations indicate that for every £1 spent on compliance, £15 is gained for the government. This return could even increase to £39 for investigations into major corporations.
According to Nowak, the insufficient funding is a clear example of the Conservative party’s narrow-minded approach towards the public sector. He believes that the lack of financial support for schools, healthcare, law enforcement, and other essential services is negatively impacting the economy.
Richer cautioned that business leaders would prefer a country that has a well-functioning state, amid speculation that the chancellor may prioritize tax cuts over funding for public services.
“He expressed that our country is facing numerous issues and requires increased spending. The state of the NHS, dental services, roads, and criminal justice system are deteriorating. In light of this, is it wise to reduce taxes?”
“It’s merely a payoff from a political organization attempting to secure votes.”
The HMRC was asked to provide a statement.
Source: theguardian.com
