Tax gap shows ‘missed opportunity’, says union

The Association of Revenue and Customs (ARC) today said that the tax gap shows a ‘missed opportunity’, as figures issued by the Government reveal that billions of pounds are still being lost to tax evasion and avoidance. The tax gap – the difference between what should have been paid in tax and what was actually received by HMRC – is still a massive £35bn, although this represented a fall from the previous year. ARC is the union representing senior HM Revenue and Customs (HMRC) staff.

ARC President Graham Black said: “This shows again why cutting jobs in HMRC is a huge own-goal. It is great to see that the work of dedicated tax professionals has led to a reduction in the tax gap, but the reality is that things will get worse as further cuts hit. The Government suggests that it is ‘investing’ in HMRC to deal with evasion – but this is typical spin. In reality HMRC is being cut by 15%, and the ‘extra’ resources are simply being re-deployed from other work. And senior tax professionals – those who can deal with the well-advised wealthy or the major multi-nationals – are reducing in number over the next few years.

“When the country desperately needs money, to ease the pain of the deficit reduction programme and to invest in growth, why is the Government letting big business and the wealthy off the hook? This really is a missed opportunity. Hitting evasion by small business must be right, but the big money lies elsewhere. ARC has shown that investing in professional tax staff could generate £6bn – money from those who can afford it, and who are happy to let the rest of society pay for their greed.”

Notes for editors

1. The Association of Revenue and Customs (ARC) is a union representing senior staff in HM Revenue and Customs, including tax inspectors, accountants, lawyers, managers and other leading professionals. ARC represents around 2,600 members in HMRC at grade 7 and above, and also trainees in grade 7 entry schemes. It is also a section of the FDA.

2. The FDA is the trade union and professional body representing 19,000 of the UK’s senior civil and public servants. Our members include policy advisors, senior managers, tax inspectors, economists, statisticians, accountants, special advisers, government lawyers, diplomats, crown prosecutors and NHS managers.

3. The FDA (formerly the First Division Association) should be referred to simply as “The FDA” and can be described as “the senior public servants’ union”.

4. ARC published a report Being Bold – a Radical Approach to Raising Revenue and Defeating the Deficit in September 2010. It led the way in urging the Government to increase the number of tax professionals in HMRC to tackle tax cheats and raise funds for the Exchequer. Despite pledges for additional reinvestment (£917m), regrettably, the Government announced a month later that HMRC resources would be cut by 15% over the next four years. This adds up to ten years of successive cuts.

5. ARC members are senior HMRC professionals engaged in work that brings in the majority of the £12bn tax gap closure delivered by HMRC last year. This work is incredibly cost effective. An ARC member earning £50k can expect to generate additional yield of at least £1.5m each year; a return of 30 times their cost. For every £1 of yield the Exchequer benefits by an additional £1 through the deterrent effect of this work both on the subject of the compliance intervention and on those who might be tempted to cheat on their taxes. The recent public outrage over tax avoidance and evasion demonstrates that people want a tax system that is fair to all. This can only be achieved if HMRC has sufficient resources to tackle tax avoidance and evasion across all sectors.

6. Graham Black, ARC President, is available for comment.

7. For further information contact:

Graham Black, ARC President, tel: 020 7401 5559 or 07766 497976.

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