It seems there is still an existing failure by HMRC to crack down on the wealthy failing to pay their taxes. The public accounts committee, based in The Commons, has said that a failure to find and condemn wealthy tax dodgers has caused a lot of people to lose all faith and confidence in the system. The wealthiest people in the UK, or, Britain’s ‘elite’ as they are sometimes known, appear to get away with tax dodging on a shockingly high level. They are simply not being chased up for the likes of outstanding tax bills, as concluded by parliament’s spending watchdog. Enough is enough and there are now calls for HMRC to pull their finger out and do something about it. They have gone on to say that there is no chance of running a successful system when there are flaws such as this that still exist. So why is this still happening?
The news comes as the report into findings was released last Friday. Tax collectors for those of a high net-worth of £20m or more operate from a ‘specialist unit’ and when the report looked into their figures, they found that the amount of tax being paid by this group of individuals has in fact dropped by at least £1bn since the unit was set up, back in 2009. This finding was shocking, especially as tax receipts rose by £23bn. What’s even more interesting is that HMRC have sung the praises of the unit ever since it was established, expressing how well their new and improved system works. According to many, the issue is occurring simply because of the fact that HMRC workers are not ‘tough enough’ when it comes to their wealthy customers. Everything from the job title of those chasing the payments (‘Customer Relationship Managers’) shows just how lax the system actually is. Calls to toughen the rules have been made plenty of times, as currently it seems that one rule is for the rich, and the other for everyone else.
Over Christmas, HMRC did attempt to improve their reputation by releasing a report that showed it clamped down on a group of wealthy individuals that were caught investing in empty data centres in 2009. They all had the prospect of a tax profit in mind. The crime involved footballers as well as other celebrities so this was a massive PR success for HMRC. However, it seems this was definitely not enough for them to now sit back and say that their system is doing its best. Quite frankly, one good deed back in 2009 will not quite cut it and the huge drop of taxes paid by the wealthy definitely warrants some serious explaining.
In the rules, HMRC has the right to investigate a third of all high net individuals at any one time which could potentially open investigations into as much as £1.9 billion. However, since 2012 HMRC has issued a measly 850 penalties to this particular group, which totalled nothing more than £9 million. Even when they are issued, the penalties themselves average at just over £10, 000, which is hardly bank-breaking for a multi-millionaire.
One solution to the problem could be a recording of the advice these ‘customer relationship managers’ hand out to their clients, so that anything untoward can be investigated immediately. When ‘normal’ people contact HMRC (in the event that you’re successful in getting through) you are informed that your phone call will be recorded. So why isn’t it the same? The issue of whether or not HMRC is doing its job properly, and if they are, whether its working is rife and definitely needs to be assessed, before all confidence in the tax system is lost completely.