George Bull

Written by: George Bull

George Bull

Senior Tax Partner

Clamping down on tax crime can help pay for coronavirus recovery

When the situation demands it, the UK has a great capacity to respond to crises. The figures are spectacular and emphasise two key points. First, when resources are needed, they can be found. Second, strenuous measures will have to be taken to meet all these extra costs.

The furlough scheme covers 6.3 million jobs and 800,000 employers. While incomplete in respect of new joiners and expected to evolve to reflect the delayed or phased reopening of businesses after 30 June, it is a remarkable example of fundamental policy development and implementation in a very short timescale.

While estimates vary, it seems that the NHS across the UK has taken on around 100,000 extra nurses and doctors to help it cope with the pandemic. It has received offers of help from 750,000 volunteers. With the need to establish a test, trace and isolate strategy before the lockdown can be lifted, the Government is now recruiting a tracing army of 18,000 people. 

Switching from the coronavirus to brexit, 50,000 customs agents are to be recruited and trained before the end of December 2020. They will be needed for the new customs arrangements with Europe which, it is estimated, will require the completion of an extra 200 million forms per year from 1 January 2021.

The costs are spectacular too; around £13 billion per month for the furlough scheme alone. The new customs arrangements are estimated to cost around £1.5 billion per year.

While tax reform can help meet the needs of post-coronavirus UK there are lessons to be learned from what the UK’s public services can deliver when they are properly resourced. We have previously reported that tax lost through criminal attacks, tax evasion and the hidden economy has averaged around £14 billion per year since 2010. To put it another way, if HMRC was adequately resourced to stamp out tax crime, much of the nation’s fiscal pain of recovery from the coronavirus could be eliminated by collecting these taxes on time.

We are not knocking HMRC which is proud of its success in bringing down the levels of legal tax avoidance to historic lows. However, it is alarming to see so little progress being made in reducing the amount of tax lost through illegal criminal attacks, evasion and the hidden economy. That comes down to resources.

Much has been said about the importance of consensual policing during the lockdown. We are concerned that there would not be similar support for a coronavirus-recovery policy of increasing tax liabilities for honest taxpayers who are already doing their best to comply with their tax obligations in an increasingly complex tax system.

Where there’s a will, there’s a way. As the UK Government plans our route out of lockdown, we urge it to increase the resources available to HMRC so that they can tackle tax crime by the relatively few for the benefit of society. Surely, it’s wrong to extract more tax from honest taxpayers while HMRC does not have the resources to tackle such horrifying levels of dishonesty?

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