Where are the billions in missing tax?

It’s been a busy week for tax campaigners. It was reported that the Conservative party chairman, Nadhim Zahawi, has paid a £1 million penalty to HMRC for being ‘careless’ with his taxes. 

Zahawi initially didn’t pay the right amount of tax on £27 million of income from YouGov, the polling company he founded. It’s been suggested he simply forgot. This stretches credulity, as our Executive Director Robert Palmer told GB News. Zahawi describes his actions as ‘careless’. 

We all have to pay tax. When rich individuals and wealthy companies don’t fully comply, it dents confidence in the system for everyone else – and takes money away from our public services.

It’s staggering to believe that someone who was briefly Chancellor of the Exchequer, and in charge of our tax system, failed to pay his own taxes properly. It’s untenable that he remains in public office. Zahawi must go. 

As Robert said on Sky News, the episode raises broader questions about how the UK’s tax authority, HMRC, operates.

Short staffed

The Zahawi case came to prominence following the relentless digging and media work of former tax lawyer Dan Neidle. 

This case raises serious questions about HMRC’s own ability to investigate complex tax cases. HMRC’s problems go beyond Zahawi. The department lacks the tools and resources it needs to do its job properly. 

Parliament’s spending watchdog said two weeks ago that there was a £42 billion black hole of unpaid taxes, in part because HMRC didn’t have the staff to enforce compliance. 

HMRC staff who usually deal with tax dodging have been moved to work on Covid and Brexit in recent years, making the problem worse. 

HMRC staff are under such a strain that they have announced they are balloting to go on strike. We're fully behind the over-stretched tax inspectors fighting for better pay and conditions. 

These issues with HMRC are explored in greater detail today in a Guardian comment piece Robert wrote. In the piece he also sketched out the unfair – but legal – routes that are open to wealthy individuals and companies to reduce their tax bills.

In order to have a fair and effective tax system – that stops the rich and powerful playing by a different set of rules – HMRC needs to be properly resourced, as Robert told Julia Hartley Brewer on Talk TV.

HMRC staff are worth their weight in gold when it comes to bringing in tax. The government must invest more in the tax authority – and such investment would easily pay for itself through improved tax receipts. It’s an easy decision.

As Robert said on Talk TV, there are grounds for optimism. Over the last ten years governments around the world have made some progress on cracking down on tax dodging, in part due to pressure from tax justice campaigners. There’s so much more to do, but it is possible to change things. 

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