More smoke. A few mirrors, too.

July 2, 2012

Hey, did we notice the HMRC Annual Report and Accounts coming out last week?

OK then, let’s all turn to page 11 and have a look at the Tax Gap.  Now this, as any fule kno, is the gap between what ought to be paid, and what HMRC actually manages to trouser.  The definitions of “ought” and “trouser”, of course, we will leave for some other time when we’re feeling particularly pedantic.  Or brave.

But look at the figures at line nine or ten on page 11:

Tax gap – difference between all the tax theoretically due and tax actually collected


7.9% (£35bn)


8.1% (£39bn)

Yes, the gap has gone down from £39bn to £35bn.  Woo, and indeed hoo.

And now look at the line above it, where we see that my former colleagues brought in £13.9bn – and I’m going to repeat that, that’s nearly fourteen billion pounds – from compliance activity, the bread and butter work of saying “these ‘ere accounts don’t look right to me, squire…” with all the follow up high and low tech investigation and collar-feeling that might entail.  (Pause here for a moment to remind ourselves that this money is being brought in by my former colleagues, the people whose salaries we’ve frozen, pensions have cut and numbers have decimated, and who return eleven times what we invest in them.  Not that I’m biased, or anything.)

And then look at this year’s figure.  Is it more, or is it less?

This year, there was £8.2 billion of cash collected from compliance and £8.48 billion of revenue protected.

Revenue protected?

See note 12:

12 From 2011-12 onwards we will differentiate between two types of additional revenue brought in from compliance activity:

• Cash collected: The total amount of tax that HMRC collects from activity to tackle those individuals and businesses that have not paid the tax that is due as a result of tax enquiries identifying evasion; and

• Revenue protected: The value protected by activities including: seizing illicit goods, preventing erroneous payments, deterring future non-compliance, addressing avoidance loopholes etc.

So 8.48 billion is theoretical tax; tax that we might have collected from Fred because Fred was frightened off using the loophole that Harry thought he’d identified, because HMRC came down on Harry like the proverbial ton of bricks and fined him as well?  So not real money, then?

How much of the previous year’s figure was real money and how much was fairy money, too?

The ‘additional revenue’ measure employed in 2011-12 is slightly different to the ‘compliance yield’ measure reported in 2010-11. Comparing the two measures requires both positive and negative re-calibrations which, for 2010-11, had no overall net effect. Therefore the two measures are broadly comparable.

I would rather like to see the “positive and negative re-calibrations” involved in comparing the two figures but I already have two, or is it three, FoI requests outstanding and I don’t want to be a nuisance.  But I’m sure everything is clear cut and above board.

I also have a rather nice bridge I could sell you, if you’re at all interested in real estate?

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