Our taxes pay for the things we value most
We know that taxes are a huge part of what makes our society work. Whether paying for hospitals, schools, or police, everyone contributing their fair share of tax is vital to ensure Britain remains a great place to live.
However, every year we lose at least £31bn in taxes that should be paid but are not. That is more than we spend on police, fire services, courts, and prisons combined. This is known as the UK Tax Gap.
We know we will never collect every penny, but cuts to HMRC mean they are struggling to make sure everyone plays by the rules. We think that we should give HMRC the tools it needs to do its job and collect the money owed to all of us.
We get a huge return from the money we put in
HMRC’s enforcement work includes all the audits and investigations that make sure people are paying the right amount of tax. This work offers fantastic value, as for every £1 that HMRC spends ensuring the proper amount of tax is collected, it gets an average of £11 back in returns.
The question is, if we get so much from investing so little, why not invest a little more and secure more money for the taxpayer? Instead, the number of compliance checks done by HMRC fell by a third between 2016 and 2019.
We think better enforcement to make sure everyone pays their fair would mean more money for the public services that we all rely on and less need for tax rises to cope with Covid-19.
HMRC’s best return comes from large businesses where for every £1 spent on enforcement it earns £44 for the taxpayer. Even its worst performing category, individuals, offers returns of seven to one.
We currently spend £490m investigating small businesses for a return of £5.6bn. However, over £13bn still goes missing every year.
The National Audit Office has said “the high overall return on investment indicates HMRC should invest more across its compliance activities.”