Tax evasion or tax avoidance? Evasion is illegal; avoidance isn’t. But it’s a matter of semantics. They both mean the same thing: not paying tax you should pay, either morally or legally.

As reported by the Express newspaper, a new report into HMRC by the House of Commons Public Accounts Committee reveals wealthy tax evaders are defrauding the British government out of a monster 16 billion pounds per year.

HMRC should do more to prosecute wealthy tax evaders

The report recommends HMRC does more to prosecute rich tax evaders. They’ve been asked to clarify how they plan to do it and have been given a deadline of November 2016 to do so. The report also said there had been very little progress in cutting tax fraud over the last five years, and HMRC’s methods for dealing with fraud were slammed as unclear. Even the reports they make into their own progress are about as clear as mud. What a mess.

How can the issue be resolved when HMRC is in denial?

In November 2015, the same committee said the number of criminal prosecutions for offshore tax evasion was “woefully inadequate”. HMRC, on the other hand, still insists it’s one of the world’s ‘most effective’ tax collectors.  While HMRC might be one of the planet’s most rigorous tax collectors, grabbing an impressive 93p of every tax pound due, there’s obviously an enormous disconnect between what the revenue thinks it’s doing and what they are actually doing. They can’t possibly be getting 93p of every tax pound from the super-rich, or there wouldn’t be an issue. And if HMRC doesn’t think there’s a problem, how will it ever get resolved?

In response to the criticism, HMRC said: “Tackling tax evasion is an absolute priority for HMRC, with 26,000 staff focusing on evasion, avoidance and fraud. We have increased prosecutions of wealthy tax cheats and our crackdown on offshore tax cheats has already brought in more than £2 billion since 2010. HMRC is currently investigating 1,100 cases of offshore evasion, including 90 criminal cases of which 29 cases are already in the court system, ensuring that no-one is beyond our reach.” 

Vodaphone’s tax affairs highlighted by one furious commentator

Written in response to the article, one comment on the Express website caught our attention. It concerns Vodafone’s tax affairs and illustrates why ordinary, honest people and businesses are so exasperated by the whole tax evasion and tax avoidance thing:

“Vodaphone’s tax bill came to £3.2 billion and they did not deny it, did not challenge it, they simply refused to pay it. After months of whining and wheedling Hartnett, as head of HMRC managed to get a “deal” which says Vodafone pays £320 Million. Yes, a measly 10%. Me? I’d have taken their 3G and 4G licenses away, used the military to jam all their phone frequencies and basically driven them out of business; all of their customers would then have gone to Orange, T-Mobile, Three, etc. who would probably have been very glad at the extra business. Then when the time came for those companies to pay THEIR taxes all, I’d say is ‘remember there used to be a company called Vodafone before they refused to pay their tax bill?’. Enough said.”

What’s your view?

How do you feel about massive corporations and super-rich individuals dodging their tax? Do you think HMRC is doing a good enough job to create a level playing field for all taxpayers?