Chancellor of the Exchequer, George Osborne, has sent a letter to HM Revenue and Custom’s chief executive, Lin Homer, stating that tax evasion by big businesses in the UK should be clamped down upon.
Lin Homer has been set the target of raising £17bn in the 2012/2013 tax year by capturing tax cheats in the act, in the Governments bid to alleviate ever growing public anger.
With the addition of this new target set out by Osborne, HMRC’s total tax revenues (if on target) would reach £457bn in the 2012/2013 financial year.
In his Budget 2012 speech on 21 March, Osborne announced new tax avoidance measures; referring to the act of tax avoidance as ‘morally repugnant’.
The Chancellor’s announcement has been backed up by the release of figures by the Treasury this week, which display nearly one tenth of people earning over £10m per year pay tax below the basic twenty per cent income tax rate.
In his letter to Lin Homer, George Osborne verbally recognised that HMRC was ‘highly successful’ in increasing tax revenues to £13.9bn for the 2011/2012 tax year and requested that HMRC bleed a further £1.3bn from tax evasion and improve relationships with ‘complex tax affairs of the largest businesses’.
HM Revenue and Customs were also ordered to continue ‘tackling tax avoidance, [tax] evasion and criminal attack’ by the Chancellor of the Exchequer.
Experts have announced fears that HMRC cut backs will make new targets harder to reach and that the Revenue’s service could deteriorate even further.
HM Revenue and Customs has come under increased public pressure since the accusation from MPs over ‘sweetheart’ deals with big corporations and an alleged stern approach to average tax payers who have not paid the correct amount of tax.
Osborne’s 2012 Budget has given HMRC draconian orders to chop nearly £1bn from their budget whilst improving HMRC services; to avoid another embarrassing incident occurring such as the admission in September 2010 that 5.7 million UK tax payers had been billed the wrong amount for two financial years.
In the last seven years HMRC have cut their staff levels by over a third and have closed tax offices up and down the country. It is expected that a further 3,000 staff will lose jobs within the Revenue over the 2012/2013 tax year.
With a new added pressure to raise revenues from the Chancellor of the Exchequer, only time will tell if HMRC’s customer service to the average taxpayer deteriorates, as they lose more staff and concentrate more efforts on raising an additional £3.1bn by targeting tax evasion.
Kevin Kinsella, of KinsellaTax, said:
“Am I going absolutely mad? Is cutting back experienced staff a way to increase productivity, as well as substantial cuts in HMRC funding.
“When I read economics at Manchester University I am sure this sort of planning would have been frowned upon in an effort to increase productivity. Now I am not sure what Mr. Osborne read at Oxford University, but one thing he is poor at is connecting to his staff (HMRC) and the public. At large he is an absolute disaster.
“HMRC staff can only do a certain amount, I don’t believe they are ordained and so miracles are not the order of the day. Osborne seems like the WW1 generals urging their men on to greater glory, but really doing sweet FA themselves.”
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