HMRC’s £24bn from tax crackdown looks bogus
Last month HMRC said they were getting some amazing results, despite staff cutbacks they were pulling in £24 billion in taxes – that is nearly £1bn higher than the target set by George Osborne in the Autumn Statement in December. The mainstream media (including the BBC) printed the press releases unquestioningly. But all is not as it seems.
Since 2011/12 HMRC has reported not just the extra tax it has already brought in but also what it calls “revenue protected”, which is future tax it hopes will be paid as a result of its intervention. Information obtained by Private Eye under freedom of information laws shows that it includes up to five years’ hoped-for future extra tax payments in its “revenue protected” figures.
Here’s the article
Private Eye Issue 1368, 13 June – 26 June 2014 HMRC
NO SOONER had the last Eye gone to press than HM Revenue & Customs put out a highly misleading report on its success in fighting tax dodging using methods that just last month Eye 1366 had exposed as seriously flaky.
HMRC claimed its efforts last year had scooped an extra £23.9bn from tax investigations, which the media swallowed hook, line and sinker. “The government has raised a record £23.9bn in additional tax for the year to the end of March as a result of a crackdown on tax avoidance,” reported the BBC online, while its broadcast outlets faithfully parroted the same line.
Tax minister David Gauke (pictured) giddily tweeted a link: “Here’s the BBC story on HMRC’s best ever year in securing revenue.” Alas, as he would have known, it was balls. Since 2011/12 HMRC has reported not just the extra tax it has already brought in but also what it calls “revenue protected”, which is future tax it hopes will be paid as a result of its intervention.
Knowing that a breakdown of its numbers would wreck the story it was spinning, HMRC refused to tell the Eye how much of the £23.9bn was actually extra cash. The figures, it says, will be released “in due course”, ie buried in its annual report during the summer recess. But the small-print of another publication earlier this year, HMRC’s “mid-year report to parliament”, gives a clue.
In the first six months of the last financial year, HMRC’s “compliance yield” was £8.9bn, of which just £3.5bn, or 39 percent, was cash collected rather than revenue protected (or “wishful thinking” as one insider put it). At this rate, the idea that the authorities secured an extra £23.9bn tax last year from its investigations and checks would have been overstating things by, ahem, £14.6bn — or twice the international aid budget.
HMRC’s announcement, in a press release and accompanying document called “fast facts” (surely “fast and loose facts “? Ed) contained another major porky. “In total HMRC expects to secure £100bn from its compliance activities from May 2010 to March 2015, which is almost double the £52bn that was achieved between 2005-06 and 2009-10”, it claimed in words echoing a boast made by George Osborne in this year’s budget alongside a chart showing rising income from investigations.
While it admitted in small-print below the chart that “the data series is not directly comparable”, it did not explain that the first number was based on a completely different measure — “additional liability assessed”, ie excluding the wishful thinking, to the latter. As for how HMRC inflates the figures with so much wishful thinking, information obtained by the Eye under freedom of information laws shows that it includes up to five years’ hoped-for future extra tax payments in its “revenue protected” figures. No wonder it waits until the Eye goes to press before punting out the dodgy stats the rest of the media regurgitate unquestioningly.