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TW Ed finds himself defending HMRC from criticism.

Criticism of HMRC came this week from a quite unexpected source: not us – or more specifically, the Local Government Association (LGA), which opened with a press release “Government Urged to Act Over Lost Billions”.

I urge those with a sensitive disposition when it comes to poor grammar not to read the article, lest they come away with hackles raised. Having ‘tutted’ my way through the first few paragraphs, the gist appears to be that if HMRC were as ‘good’ as councils at collecting tax revenues, then we should all be better off. Or, as the LGA press release quite selfishly put it:

“Council leaders are warning that, despite recent Government efforts to tackle evasion and avoidance, it is not fair that efficiently run local services continue to pick up the bill of those who evade and avoid their tax liability.”

I think it is neither those efficient services, nor specifically the people behind them, that have to make up the “Tax Gap” to which the LGA alludes but ultimately (and more accurately) all UK taxpayers.

Now I can wire a plug perfectly well, but that does not make me an electrician. Long-standing (suffering) readers may recall I have previously admitted to DIY misadventure, and tales of derring-don’t, such that I am probably here today only because of the competence of the professional who wired the mains consumer unit in my house.

Likewise councils may be admirably proficient at collecting council tax (they reckon to collect about 97.5% of what is due) but they concentrate on a very narrow area of tax – and, to coin a phrase, they know where you live.  Even so, they still have around £2.3 billion of arrears to collect in England alone, based on figures up to 2010/11 published in Hansard last year.

I think the LGA is deliberately comparing apples and oranges. Councils themselves are not averse to a little tax avoidance when it comes to PAYE and NIC on payments to high-earning executives, according to the BBC.

Of course it is right to say that if HMRC can collect proportionately more of the tax that is actually due, then either more money can be spent on public services, or the amount actually due may be reduced. But I don’t think local councils hold the solution to that complex problem – at least part of which is how to quantify “The Tax Gap” itself. If anyone does have the solution, they should please feel free to write in!

Regards all,

TW Ed