Thursday, August 26, 2010

Bounty hunters? Try paradise

David Cameron is right to employ bounty hunters to crack down on benefit cheats. But why stop there? What about bounty hunters to crack down on tax evaders as well?

They cost the honest taxpayer far more than the unemployed underclass.

Some estimates put the “tax gap” at £120 billion. The taxman says it’s £40 billion.

The Coalition is to employ an army of snoopers, on a five per cent commission, to trawl through people’s bills and financial records in search of benefit frauds.

No doubt they’ll find a reasonable number of people. Mr Cameron claims fraud costs the honest taxpayer £1.5 billion a year.

The benefits system is so complicated, though, that genuine mistakes by claimants and the Government come to another £3.7 billion of money “wasted”.

Some fraudsters aren’t hard to spot. Court cases crop up regularly involving the bloke who claims he’s laid up with a bad back and is out cleaning windows or someone with a gammy leg who turns out for his Sunday league side every week.

It may be that Dave’s army of curtain-twitchers and dustbin-snoopers will save us a fortune. Let’s hope so.

But if we’re taking a high moral tone about the feckless and idle, what about the rich and industrious?

We can’t really be sure how much benefit fraud costs because it’s a crime people try very hard to conceal. In the same way, nobody really knows how large the “tax gap” is either.

Her Majesty’s Revenue and Customs, our official tax-gatherers, put the figure at £40 billion. Other experts say it’s three times as much.

Either way, the Government is missing out on a vast sum of money.

The difference between what the Revenue thinks it ought to receive and what it actually gets – the tax gap – includes illegally evaded taxes and those which are legally avoided.

There is nothing wrong with making sure you tax bill is as low as possible. It’s up to the Government to make sure the laws are watertight.

If big multi-national companies and lucky billionaires can find ways to cut their tax bills and stay on the right side of the law, good luck to them.

Some people claim it’s immoral to keep your tax bill to the legal minimum. But few of us would willingly pay more tax than necessary – especially when we see how much of it is wasted. Morality has nothing to do with it.

Tax avoidance is fair and reasonable. It’s up to the Treasury to deal with loopholes in the law.

But there would be no harm in appointing an army of bounty hunters to go after individuals and companies which actively evade paying tax.

Imagine who might fall into that category. For instance anyone who has paid a builder in cash, to avoid the VAT, or failed to declare their earnings, could be ripe for investigation.

The black economy – or “shadow economy” if you’re politically-correct – is worth billions and set to grow when VAT hits 20 per cent in January.

But a few cash-jobs are chicken-feed. From time to time we hear of great HMRC triumphs when a gang of VAT cheats or cigarette smugglers get brought to justice.

In May, 21 people, including nine men from the West Midlands, was jailed for a £37.5 million VAT fraud.

Last month, Wolverhampton car-parts dealer Balbir Baden was jailed for evading £270,000 of VAT and income tax.

Even these cases are only the tip of the iceberg.

HMRC says in its annual report that “the proportion of UK taxpayers who are willing and able to pay their taxes has increased from 49.1 per cent to 51.6”.

This is apparently seen as something of a success. But it means that almost half of the people and companies in Britain are either unwilling or unable to cough up. That’s a lot of potential for our bounty-hunters.

One of the most bizarre legacies of Gordon Brown’s time at the Treasury is that he spent many years cutting down the number of tax-gatherers.

For someone desperate to spend our money, it’s surprising he was so negligent about collecting it all in the first place. But he was.

As a result, the revenue doesn’t have enough experienced staff to crack difficult tax cases. They are far more likely to come down hard on the corner shop-owner than they are on the multi-national corporation.

There are one or two household name businesses which manage to pay little, if any, tax in this country or anywhere else for that matter.

So why doesn’t the Government accept its own customs men aren’t up to the job and hand the task of chasing the missing billions to the private sector?

The vast sums of revenue the Government misses out on – maybe more than ten times as much as it pays out to benefit fraudsters – must be worthy of investigation by a few privatised bounty hunters.

There is a simple alternative, of course. Cut taxes so drastically it’s no longer worth trying to evade payment and Government income would actually go up. Unfortunately, that doesn’t seem to be an option.

2 comments:

Anonymous said...

Why stop there?
Thieving, lying, cheating, abusive MPs.
Illegal immigrants.
Cowboy builders.
Fox hunters.
Smokers.
etc.
All good targets for "bounty hunters"

Norfolk Blogger said...

How about Bounty Hunters to crack down on the 10 MPs abusing staff who are employed to ensure MPs don't fiddle their expenses ?