HMRC fraud team’s civil inquiries fall by half over five years

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Original article by Ed Siddons republished from The Bureau of Investigative Journalism under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.

The number of civil tax avoidance leads looked into by HMRC’s Fraud Investigation Service has fallen by almost half in five years, while the number of civil cases it has formally opened has decreased by more than a quarter.

These figures, obtained by the Bureau of Investigative Journalism (TBIJ) under Freedom of Information laws, raise questions about the tax authority’s performance since the start of the pandemic.

The findings follow revelations by TBIJ and the Observer in September that prosecutions following HMRC investigations plummeted by two thirds in five years. TBIJ then revealed in January that HMRC has not charged a single company under a landmark 2017 law to clamp down on corporate tax evasion.

The new figures suggest that the tax authority’s civil enforcement has also declined alongside its use of criminal powers.

Margaret Hodge MP called on HMRC to “finally crack down on egregious tax avoidance and collect the revenues we desperately need”.

In the tax year of 2018/19, HMRC’s Fraud Investigation Service opened 37,273 “risks”, a term used to describe a preliminary inquiry into suspected error or false declaration. In 2022/23, that figure fell to just 21,338 – a 43% decline in five years.

The number of civil cases that were formally opened fell by 28% in the same period, from 17,424 to 12,585.

More from this projectJust 11 ‘wealthy’ people prosecuted for tax fraud last yearNot a single company charged with tax evasion under stronger HMRC powers

“The new revelations that HMRC is failing to make up for [declining numbers of criminal prosecutions] by undertaking more civil investigations is just disgraceful,” said Hodge. “These consecutive failures mean tax dodgers and their enablers can continue getting away scot-free.”

Stephen Daly, senior lecturer in corporate law at King’s College London, said: “[The number of] investigations has fallen off a cliff, and that can’t be good … If you don’t enforce the rules, then you create a culture in which people don’t have to worry about their tax returns later being checked.”

Civil inquiries and investigations declined sharply in 2020, when the Covid-19 pandemic interrupted HMRC’s enforcement activity. But despite a significant rise last year, the number of cases remains well below pre-pandemic levels. “If, in fact, this isn’t explained by Covid, then it’s unacceptable,” said Daly.

A HMRC spokesperson told TBIJ that figures relating to its Fraud Investigation Service “do not take account of our overall compliance activity”, including 300,000 interventions opened in 2022/23. They said the authority has recouped £136bn from compliance interventions since 2018/19.

Easy targets?

As well as the general decline in civil cases opened by HMRC’s fraud unit, the number opened by its team for investigating offshore, corporate and wealthy taxpayers has fallen especially steeply, by 56% in five years.

“Even when [HMRC is] opening civil cases, they appear to be going after the easier, lower value targets,” said Fiona Fernie, a partner at tax advisory firm Blick Rothenberg.

Last year, HMRC reached one of its highest ever tax settlements when former F1 mogul Bernie Ecclestone paid £650m after pleading guilty to tax fraud – but that success was “the exception, not the rule”, said Fernie.

Part of the problem is that the UK has an increasingly complex tax code, which makes enforcement action difficult, she said. “The staff are under considerable pressure, we get an increasingly complicated system every year, [and] it’s very difficult to get anybody to keep up with it.”

Robert Palmer, executive director of Tax Justice UK, said another issue was lack of resources. “We know HMRC is underfunded and resources have been diverted for work on Covid and Brexit,” he said.

HMRC estimates that it collects 95% of all the tax owed in the UK, a proportion it says has remained stable in recent years. However, it estimates that the remaining 5% still accounts for about £36bn.

“Parliamentary research shows that when the government invests in HMRC, the return on investment is significant. Until the department is properly funded, vast sums of money owed, often by the richest people and companies, will go unrecovered,” said Palmer.

The Public Accounts Committee last year found that for every £1 spent on compliance, HMRC recovers £18 in additional tax revenue. “The government is missing the opportunity to recover billions in lost revenue by not resourcing compliance,” it said.

Original article by Ed Siddons republished from The Bureau of Investigative Journalism under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.

Continue ReadingHMRC fraud team’s civil inquiries fall by half over five years

‘We Are Not Taxing the Very Wealthy Enough’: Runaway Inequality About to Get Worse

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Original article by Jake Johnson republished from Common Dreams under Creative Commons (CC BY-NC-ND 3.0).

People participate in a “march on billionaires” event on July 17, 2020 in New York City.
(Photo: Spencer Platt/Getty Images)

“Americans overwhelmingly prefer raising taxes on the ultra-wealthy and huge corporations to making cuts to critical programs like healthcare, medical research, and infrastructure,” said Sen. Elizabeth Warren.

The United States’ astronomical levels of economic inequality are poised to become further entrenched in the coming years as what The New York Timesdescribed Sunday as “the greatest wealth transfer in history” gets underway, with the richest members of the Baby Boomer generation set to pass trillions of dollars in assets on to their descendants—often paying little or nothing in taxes.

“Most will leave behind thousands of dollars, a home, or not much at all. Others are leaving their heirs hundreds of thousands, or millions, or billions of dollars in various assets,” the Times reported. “Of the $84 trillion projected to be passed down from older Americans to millennial and Gen X heirs through 2045, $16 trillion will be transferred within the next decade.”

The newspaper added that thanks to the loophole-ridden U.S. tax system, “heirs increasingly don’t need to wait for the passing of elders to directly benefit from family money, a result of the bursting popularity of ‘giving while living‘—including property purchases, repeated tax-free cash transfers of estate money, and more—providing millions a head start.”

“The trillions of dollars going to heirs will largely reinforce inequality,” the Times observed. “The wealthiest 10% of households will be giving and receiving a majority of the riches. Within that range, the top 1%—which holds about as much wealth as the bottom 90%, and is predominantly white—will dictate the broadest share of the money flow. The more diverse bottom 50% of households will account for only 8% of the transfers.”

Don Moynihan, a professor at Georgetown University’s McCourt School of Public Policy, argued that the Times analysis further demonstrates that “we are not taxing the very wealthy enough.”

The Times noted that individuals in the U.S. can pass nearly $13 million in assets to heirs without paying the federal estate tax, which only applies to around two of every 1,000 American estates.

“As a result, although high-net-worth and ultrahigh-net-worth individuals could inherit more than $30 trillion by 2045, their prospective taxes on estates and transfers is $4.2 trillion,” the Times observed.

The explosion of wealth inequality in the U.S. over the past several decades has prompted growing calls for systemic reform but little substantive action from lawmakers. In 2017, congressional Republicans and then-President Donald Trump contributed to the inequality boom by ramming through tax legislation that disproportionately benefited the wealthiest Americans.

Now in control of the U.S. House, Republicans are trying to make the Trump tax cuts for individuals permanent and eliminate the estate tax altogether—a move that would give the nation’s wealthiest households another $2 trillion in tax breaks.

In April, Sen. Bernie Sanders (I-Vt.) led several of his colleagues in offering an alternative proposal: Legislation that would impose progressively higher taxes on estates worth between $3.5 million and $1 billion, as well as a 65% levy on estates worth more than $1 billion.

“At a time of massive wealth and income inequality, we need to make sure that people who inherit over $3.5 million pay their fair share of taxes,” Sanders said last month. “We do not need to provide a huge handout to multi-millionaires and billionaires. It is unacceptable that working families across the country today are struggling to file their taxes on time and put food on the table, while the wealthiest among us profit off of enormous tax loopholes and giant tax breaks.”

Sen. Elizabeth Warren (D-Mass.), a co-sponsor of Sanders’ legislation, tweeted Monday that “Americans overwhelmingly prefer raising taxes on the ultra-wealthy and huge corporations to making cuts to critical programs like healthcare, medical research, and infrastructure.”

“Congressional Republicans need to get on board,” the senator added.

Morris Pearl, a former managing director at the asset management behemoth BlackRock and the chair of the Patriotic Millionaires, stressed in an interview with the Times that structural changes to the U.S. tax code—not just a crackdown on wealthy tax cheats—are necessary to slow the rise of inequality.

“People are following the law just fine. I generally don’t pay much taxes,” said Pearl, whose group has warned that democracy “will not survive” unless the rich are taxed much more aggressively.

Stressing the ease with which rich families in U.S. are able to pass assets on to their heirs tax-free, Pearl told the Times that he currently holds stock that his wife’s father, “who died a long time ago, bought in the 1970s,” an investment that “has gone from a few thousand dollars to many hundreds of thousands of dollars”—unrealized capital gains that are not subject to taxation.

University of California, Berkeley economists Emmanuel Saez and Gabriel Zucman have estimated that $2.7 trillion of the $4.25 trillion in wealth held by U.S. billionaires is unrealized.

“I’ve never paid a penny of taxes on all that,” Pearl said of his inherited equities, “and I may not ever, because I might not sell and then my kids are going to have millions of dollars in income that’s never taxed in any way, shape, or form.”

Original article by Jake Johnson republished from Common Dreams under Creative Commons (CC BY-NC-ND 3.0).

Continue Reading‘We Are Not Taxing the Very Wealthy Enough’: Runaway Inequality About to Get Worse

Wealth tax of 0.5% could cover UK’s share of loss and damage fund, says charity

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Image of superyacht Mayan Queen
Image of superyacht Mayan Queen

https://www.theguardian.com/environment/2023/may/12/wealth-tax-of-05-could-cover-uks-share-of-loss-and-damage-fund-says-charity

International fund set up at Cop27 is intended to provide compensation to countries worst hit by climate breakdown

A tax on wealthy Britons of just 0.5% could more than meet the UK’s entire “fair share” contribution to the international loss and damage fund established to support countries worst hit by global climate breakdown, a charity has suggested.

Taxing 5p of every £10 of individuals’ wealth over £1m would raise £15bn a year by 2030, well in excess of an estimated $15bn (£12bn) UK contribution to the new fund, according to an analysis by the anti-poverty campaigners Christian Aid.

The loss and damage fund, established at last year’s Cop27 climate summit in Egypt, is intended to provide compensation for climate-related disasters that are beyond the possibility of adaptation.

Sought by developing countries since 1992, the fund was the most contentious issue at the UN conference, and many of its specifics are yet to be ironed out.

Estimates of its potential cost differ, but the range of $290bn-$580bn a year by 2030 is often cited, with a midpoint of about $400bn, taking into account inflation and rising climate impacts. Christian Aid estimates the UK’s “fair share” of this to be about 3.5%, or $15bn.

https://www.theguardian.com/environment/2023/may/12/wealth-tax-of-05-could-cover-uks-share-of-loss-and-damage-fund-says-charity

Continue ReadingWealth tax of 0.5% could cover UK’s share of loss and damage fund, says charity

Staggering BP profits, Labour abandons commitment to abolish tuition fees, Nurses strike continues …

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Staggering BP profits spark outrage

Extinction Rebellion protests at BP
Extinction Rebellion protests at BP

Fossil fuel giant BP has one again reported eye watering profits. In the first quarter of 2023, BP made £4 billion.

The news has sparked outrage amongst opposition politicians and groups campaigning on the climate and cost of living crises.

Staggering BP profits spark outrage

Tuition fees: How the left has responded to Keir Starmer’s U-turn

Left wing faction Momentum compared Starmer’s shifting position to that of Nick Clegg, who famously went into the 2010 general election pledging to abolish tuition fees only to triple them when in government. A spokesperson for Momentum said: “This move wouldn’t just fly in the face of party democracy and the wishes of Labour Students. It would be a betrayal of millions of young people in desperate need of hope. The Labour leadership should learn from Nick Clegg’s failure, not repeat it.”

The former Labour leader Jeremy Corbyn made similar comments. He tweeted: “Young people should not be saddled with a lifetime of debt just because they want to get an education. Abolish tuition fees, restore maintenance grants and deliver free education for all.”

Tuition fees: How the left has responded to Keir Starmer’s U-turn

Don’t underestimate nurses’ resolve, Pat Cullen tells government

NHS sign

Cullen commented that, although the outcome of today’s meeting appeared to be set, nurses will remain in dispute with the government over pay and staffing.

“Tuesday’s meeting with Steve Barclay appears a foregone conclusion,” said Cullen. “Different unions and different professions came to different, but respectable, conclusions on this pay offer.

“The deal being accepted by others does not alter the clear fact that nursing staff, as the largest part of the NHS workforce, remain in dispute with the government over unfair pay and unsafe staffing.”

Don’t underestimate nurses’ resolve, Pat Cullen tells government

Breaking: Labour councillor exposes himself running hate account mocking left-wing candidates

Right-wing Liverpool Labour councillor Tom Cardwell has been outed apparently running a hateful troll account attacking local political opponents. 

The ‘GorstSpam’ Twitter account was set up to attack Garston councillor Sam Gorst and other Liverpool Community Independent (LCI) councillors and candidates who left Labour over the Labour-run council’s swingeing cuts to services for the most vulnerable – and has put out vile misogynistic and homophobic content.

And Cardwell exposed his link to the account when he tweeted one message pretending to be Gorst, then immediately deleted it and was stupid enough to put the same message out on the ‘Spam’ account moments later

Breaking: Labour councillor exposes himself running hate account mocking left-wing candidates

Phillips deletes tweet about buying house at 20 – she told FT she was in ‘squat’ at 22

Right-wing Labour MP Jess Phillips has deleted a tweet in which she said she bought her first home at the age of twenty and described how it changed her and her children’s ‘fortune’

Phillips has previously told the Financial Times, presumably in an oddly-placed effort to boost her working-class credentials, that at age 22 she was living in a ‘squat’

Phillips deletes tweet about buying house at 20 – she told FT she was in ‘squat’ at 22

Apologies that I sometimes lose it dear readers

Continue ReadingStaggering BP profits, Labour abandons commitment to abolish tuition fees, Nurses strike continues …

Zahawi’s tax evasions point to a more fundamental problem for the Tories

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https://morningstaronline.co.uk/article/e/zahawis-tax-evasions-point-more-fundamental-problem-tories

TORY chairman Nadhim Zahawi’s tax problems are a bigger headache for the Prime Minister than he has yet acknowledged.

Zahawi pleads that it was mere carelessness that saw him forced to pay HMRC nearly £5 million in unpaid tax (inclusive of a penalty) while he was, er, the Chancellor of the Exchequer.

Financial sloppiness isn’t a great look for a chancellor, but in Zahawi’s defence he’s admitted to it before. It was after all a “genuine mistake” that saw him claim thousands in expenses to heat the stables for a horse-riding school on his Warwickshire estate.

Labour rails at Conservative “corruption and cronyism,” but the fundamental issue is more basic still. This is a government of the rich, for the rich, by the rich and it is making us poorer.

https://morningstaronline.co.uk/article/e/zahawis-tax-evasions-point-more-fundamental-problem-tories

Continue ReadingZahawi’s tax evasions point to a more fundamental problem for the Tories

Rupert Murdoch’s history of political influence

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Murdoch repeatedly meets UK prime ministers in secret. The deal is that Murdoch sets the agenda and provides support to these right-wing politicians in return for favourable treatment. It should be recognised and accepted that Murdoch is a foreign tax evading billionaire so politicians are promoting private foreign interests over those of their country.

4 January 1981 Margaret Thatcher and Rupert Murdoch meet in secret with the meeting repeatedly denied since. Thatcher agrees that Murdoch can aquire the Times and Sunday Times newspapers thereby controlling a huge proportion of UK newspapers without a referral to the Monopolies and Mergers Commission.

Murdoch attacks and breaks the power of the UK newspaper unions with the support of Thatcher’s government and UK police.

The News of the World phone hacking scandal damages Rupert Murdoch’s influence. The News of the World hacked the phones of murder victims and thereby damaged police investigations as well as hacking the phones of royalty and celebrities.

Murdoch’s political influence returns following the phone hacking scandal.

Boris Johnson's thumbs up from Rupert Murdoch
Boris Johnson’s thumbs up from Rupert Murdoch

Murdoch owns prominent UK politicians Boris Johnson, Michael Gove and Priti Patel. Boris Johnson gets the thumbs-up to be UK prime minister from Murdoch at the London Olympics, Priti Patel and Michael Gove attend Murdoch and Jerry Hall’s wedding celebrations in London. Priti Patel behaves as Rupert Murdoch’s private secretary e.g. here and here.

Continue ReadingRupert Murdoch’s history of political influence

Cameron’s Pig Society :: Dodgy Banking, government supports tax evaders

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I’ve been looking at Cameron, Osborne & Co’s record on tax evasion. Tax avoiders and evaders are ennobled and joining the government, ideological opponents to tax appointed to senior HMRC posts, etc. There’s certainly the appearance that Cameron, Osborne & Co deliberately scupper EU agreements to tackle tax evasion to continue the status of the UK’s tax havens – that they work [ed: in the interests of for] that tiny elite, the super-rich tax evaders.

There’s a suggestion here that Cameron misled the House of Commons yesterday.

I’m still trying to get to grips with this issue. I certainly hope that the Labour Party are doing likewise. In the meantime, a vid about HMRC assisting UK tax evaders back in 2010/11 and ennoblement and appointment to government office.

10pm edit: I’m coming to the conclusion that Cameron, Osborne, Boris, etc – the Conservatives – are and represent the tax-evading super-rich. This is seen in Cameron’s statements and his government’s actions. The rich are asked to pay their taxes as opposed to telling them that they will be prosecuted and imprisoned for the serious crime of tax evasion. Cameron’s government maintain and support the UK’s tax havens. Cameron’s government promote tax evaders and avoiders to the Lords and bring them into his government. Individuals ideologically opposed to taxation are appointed posts in HMRC and HMRC investigators are reduced.

Continue ReadingCameron’s Pig Society :: Dodgy Banking, government supports tax evaders