Leader: A culture of evasion
The taxman needs to create a culture of compliance, starting by reviewing its own policies
In his podcast last week, HM Revenue & Customs’ effective policy chief
Dave Hartnett said the organisation needed to instill a culture in which
inspectors didn’t automatically assume taxpayers were trying to avoid their
responsibilities.
Hartnett should not speak too soon. For the amnesty announced this week for
taxpayers with unpaid liabilities in foreign bank accounts raises disturbing
questions.
When the original Barclays special commissioners judgment came out, John
Avery Jones noted that the number of people mentioned in the trawl was larger
than the number who filled in the foreign income section of the tax return. That
was one bank, with more customers with foreign bank accounts than there are
people officially declaring any foreign income.
Coverage of the moves to enable the unpaid tax to be paid has, equally, often
been sympathetic to the people evading tax. Newspapers run images of middle
class families from the shires who may or may not have extra liabilities.
Such people should know better, but there seems little point in
sanctimoniously pointing that out.
What the taxman needs to create is a culture in which such evasion, and
contrived tax avoidance, is frowned upon.
In that context, it should start with its own policies. Where tax on foreign
income is concerned, the system of domicile and residence that the UK operates
is antediluvian.
Successive generations of politicians have bottled the chance to drop it,
even though it helps to create a culture in which tax and civic responsibilities
have become obscured.
Taxpayers, seeing wealthy non-doms avoid taxation, may feel they have a right
to the same. It’s time the rule, for that reason and for many others, was
ditched.