That is unfortunate, perhaps it does require a culture shift or maybe for HMRC to gradually ramp up enforcement action so that it becomes the norm and 'everyone knows' that if you're silly enough to dodge tax that you clearly owe then action is taken.. I mean there isn't this issue so much with say council tax as people know it is straight forwards for them to issue a summons and there isn't much they can offer as a defence to avoid it.
I'd assume though in this case that there would be far less sympathy in the press if BTL landlords were facing repossessions.
It just seems bizarre that given we've got a debt issue, given that we need to cut public spending and crack down on handouts (I'm fine with that), we've still seemingly got some major leaks in terms of collecting revenue some of which ought to be easy wins for HMRC while working with others if they had some teeth and the desire to crack down a bit harder. I mean arguably adding more staff to HMRC ought to, in some situations, substantially increase tax revenue relative to the cost of those staff - it often strikes me as bizarre that HMRC are subject to cuts (unless there are some obvious inefficiencies to address). If anything we could perhaps also do with them recruiting and properly incentivising some top tax consultants from industry in order to help crack down on some of the more egregious avoidance schemes out there that perhaps cross the line.
i've posted this before but i'll do it again.
20-30 years ago a Band O (level 3) in HMRC was paid the same as a sergeant in the police. now a Band HO (level 4) is paid less than a constable. so it just shows you how much wages have stagnated. you could now be a level higher up yet effectively paid a lot less than someone else who joined a different civil service department at a much lower level than you.
Basically pay is so low and is actually been effectively getting a pay cut for the past 8 years too. Pay freeze for 2 years then a further 5 years of 1% pay rise and that is set for the next 4 years too. inflation is around 3.6% so people are leaving and taking all their tax knowledge with them into the private sector where they will get paid 5 times as much for half the work.
as for hiring tax consultants. there are people in HMRC with 40 years of experience from various tax departments, they know far more than anybody else, but the issue is wages and training is poor, that knowledge isn't getting passed on. then you have all the other issues within the civil service, nepotism, low engagement, poor morale, leaders not leading by example. it's not run like a business but more like an every man for themselves within the budget.
i'll give you a great example. they used to have their own IT. they got rid of them for contractors. contractors charged stupid money. £900 to fit a single IP phone in a room as an example (excludes cost of the phone this is just to wire it up. so after 10 years of being ripped off they decide to bring it in house. but with the wages they offer they cannot recruit anyone. so they set up a private company outwith the civil service. they don't get the same benefits but much higher pay and then effectively contract them to HMRC now.
how do you expect to hire specialists when your offering peanuts to catch guys offering big money to specialists to avoid tax? let's say you have a border 5000 miles long. and your effectively paying minimum wage to 200 security guards to police that border to ensure nobody gets across. how effective would that be? they would catch a handful, it's not their fault but the fault of the way it's being run. effectively the MP's are to blame. nationalising it will only make it worse too. you only need to look at the rail service, royal mail, utility companies to see that.
the worse wages get and it's already been set that they will continue to get worse for the next 4 years. the less skilled workforce they will be able to recruit to replace the experienced ones that leave. that is the crux of the problem. less and less skilled people replacing experienced knowledgeable ones due to terrible wages.
if you own a company making £200 million a month. you can bet you have the best tax experts money can buy. hmrc offering peanuts to police them.
