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The avoided billions: ARC proposes investment of £120m to recoup an extra £3.7bn
The union representing senior tax officials has today made its case for a significant investment in HMRC. The Association of Revenue and Customs (ARC) has published its interim proposals to help reduce the deficit and close the 'tax gap', which is estimated to be at least £32 billion of avoided or evaded tax.
ARC is making its case at a time of an unprecedented amount of public interest in some of the components of the tax gap, largely prompted by the public discovery of the complex rules, accounting procedures and international agreements that set out how, where and when Governments can tax the profits from international trade, multinational companies and commerce via the Internet.
ARC President Gareth Hills said:
"HMRC is on track to deliver an additional £7 billion in tax receipts each year to 2015 as part of the Coalition's £917 million "reinvestment" programme. However even after this "reinvestment" HMRC is still losing 13,000 staff in the period up to 2014/15.
"The scale of the overall budget deficit (£126billion) and the tax gap (£32 billion) are such that the level of this reinvestment is no longer enough. For an additional £120 million a further £3.7billion per year could be recouped.
"By investing in key personnel in HMRC the Government will be guaranteed a significant return - one it could use to draw down the deficit, to avoid further austerity measures, or to fund economic recovery and growth. Now is the time for it to abandon caution, the time for it to be bold, and the time for it to back a cast-iron winner."
Notes for editors
1. The Association of Revenue and Customs (ARC) is a union representing senior staff in HM Revenue and Customs, including tax inspectors, accountants, lawyers, managers and other leading professionals. ARC represents members in HMRC at grade 7 and above, and also trainees in grade 7 entry schemes. It is also a section of the FDA.
2. The FDA is the trade union and professional body representing 19,000 of the UK's senior civil and public servants. Our members include policy advisors, senior managers, tax inspectors, economists, statisticians, accountants, special advisers, government lawyers, diplomats, crown prosecutors and NHS managers.
3. The FDA (formerly the First Division Association) should be referred to simply as "The FDA" and can be described as "the senior public servants' union".
4. ARC's interim proposals document can be read in full at Reducing the UK Tax Gap - Proposals from ARC.
5. Having cut the budget for HMRC by £2.9bn the Government then decided to "reinvest" £917million, making a net reduction of £2bn over the Spending Review period. Staff numbers will be down to 56,000 in 2014/15. In 2005 they were 96,000.
6. ARC's interim investment proposals to reduce the deficit are as follows:
Tackling avoidance and technical tax gaps
200 additional senior tax professionals and 200 HO/SO tax professionals to challenge avoidance by large employers. Cost £64m. Projected yield over 4 years £1500m.
Additional legal resources, 150 trained lawyers and 50 legal assistants, to accelerate litigation of the Tribunal backlog and accelerate yield. Cost £35m. Projected yield £2000m.
Investment in customer and agent support
Business expansion unit of 6 senior tax professional staff at a cost of £1m. Projected yield over 4 years £35m
Building future capacity
Recruit an additional 100 graduates each year to train as senior tax professionals. Cost £20m. Projected yield over 4 years £150m (but yield will quickly build to £600m per annum as these trainees complete their training and develop into experienced tax professionals).
Total cost: £120m. Total projected yield: £3.7bn
7. ARC intends to develop and refine these interim proposals with a view to producing a comprehensive investment package prior to the 2013 Budget.
8. For further information contact:
Gareth Hills, ARC President, tel: 020 7401 5555 or 07870 592356.
Kay Hender, FDA Communications Officer, tel: 020 7401 5589 or 07980 700747.