HMRC cuts will produce surge in avoidance

CUTS to the budget of the taxman will cause a surge in avoidance and widening of the gap between the tax that should be collected and the revenues actually recovered, union officials were due to warn MPs today.

Officials from the Association of Revenue and Customs (ARC), representing senior HMRC officers, will face MPs on the Treasury sub-committee today to give evidence on impending cuts to the HMRC budget.

In a statement issued before the hearing ARC president Graham Black said: “It is no coincidence that total revenues are falling at a time when HMRC has suffered significant staffing reductions.

“HMRC is made of world-class tax professionals and the government must realise that we need to invest in HMRC and our staff, to claw back the money that should be helping to beat the deficit.”

HMRC staffing levels have fallen from around 99,000 in 2004-05 to 68,000 in June last year.

The government’s Spending Review last year revealed the taxman would have to hack its spending by a further 15%.

In September HMRC estimated the total tax gap to be £42bn for 2008-09, or around nine percent of the total UK tax liability. The taxman estimates that in VAT alone there is an estimated £15bn that goes uncollected.

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