Have we really become a nation of HMRC snoopers?

Independent

3 days ago

Has HM Revenue & Customs been running a Royal Corps of Dobbers-In? Fraud report numbers suggest that the troops are doing a fine job, if so. The tax authority received a record number of fraud tips in the 2024/2025 financial year – 164,670 in total, a handy increase on the previous year's 151,763.
Britain is good at sneaking. It sometimes feels as if British society features a small army of tin-hatted bureaucrats armed with iPads, ready to investigate Mrs Miggins' loft conversion for a minor breach of the forms or the accidental failure to pay a fee somewhere. No more pocketing a fistful of cash-in-hand tenners for fixing the pipes at number 35 for you, Mr Plumber.
Of course, the problem here is that all those cash-in-hand payments for fixing pipes add up. The sums can get quite substantial if our plumber is running half the business off the books. And what if it's a whole company of plumbers doing that? I'm not just getting at plumbers here. The practice is widespread, highly illegal, and highly problematic, not least because if we want even a semi-functional NHS, the money's got to come from somewhere.
As things stand, there is a sizeable chunk of money that is not coming in. HMRC estimated that the total UK tax gap for the 2023 to 2024 financial year came to 5.3 per cent of total theoretical tax liabilities. That racks up to £47bn in absolute terms. By customer group, small businesses were responsible for a 60 per cent share of the total. Wealthy individuals accounted for just five per cent.
While there have been some notably high-profile incidents of wealthy celebs getting called out on their tax avoidance schemes, this runs counter to the narrative that the UK's problems are solely down to the idle rich not paying their share and that cracking down on them would immediately fix it.
Now, not all of the gap is accounted for by fraud, and we should remember that people make honest mistakes. Certain forms, and the way some taxes work (looking at you, VAT…), make this all but inevitable.
But making a dent in it would deliver a hefty chunk of money to the Treasury that would fund an awful lot of schools and hospitals and more besides. If the tax gap were plugged, the £40bn hole in the public finances Rachel Reeves is grappling with would be filled without the need for any more tax rises. Whisper it, but maybe the snoops are on the side of the angels.
One thing worth noting: the amount of money paid out in rewards for people shopping the fraudsters actually fell last year despite the increase in reports. Rewards are discretionary, whereas in the US, they're statutory. There, if you shop a tax cheat, you get a percentage of the take. Something to think about. The government probably is.
Some would argue that it has only itself to blame for the level of cheating that goes on, and if taxes were lower, people would be more willing to pay up. This is not an argument that I find terribly persuasive. Just look at the US tech giants, which make billions in profits but are allergic to sending anything more than chump change to the countries in which they operate and scream bloody murder if someone suggests adding a couple of quid to their bills.
Time for some hard truths: the country is broke, or as good as. That is partly because many of us had wages subsidised during the pandemic, and energy prices were capped during the subsequent price spike. So I'm afraid that it is incumbent on us to refill the coffers if we want the NHS to work, pensions to be paid, and schools to educate a new generation of taxpayers to prevent the system from collapsing.
However, one thing the government could do if it wants Britons to be more conscientious about paying up is to start treating us like the customers we are when it comes to using the services it taxes us to provide. The question of why one is paying for service X regularly springs to mind when almost every interaction with the state feels like having your teeth pulled.
Sort that out, and maybe we wouldn't need so many snoops. Just ask the best retailers, who are well aware that if they care for the customer, then the customer will pay up and care for them.