To put this figure in context, the 2017 Budget shows £36billion is being spent on Housing and the Environment in 2017/18. That's where housing is one of the biggest issues of our time. A whole quarter of that expenditure is having to be returned.
Now the legislation has changed in recent years such that when a taxpayer has a complex situation that needs to be resolved in court, they have to pay the tax to HMRC first. Taxpayers ere on the side of caution, so not surprisingly a significant proportion of these monies has to be repaid as the courts side with the taxpayer. Some 1% being repaid out of the total of £744bn tax and NI expected to be received in 2017/18. That's just how it works, so no need to jump up and down.
WHAT ABOUT THE CASHLESS SOCIETY?
But people were jumping up and down about the Taylor Review published on Wednesday. It is estimated that some £6bn tax a year is being lost in the black or "hidden" economy. Payments made in cash that are never declared to HMRC. That's after HMRC's crackdowns on classic cash sectors such as plumbers, asking them to justify their declared income versus their diary and the jobs they have undertaken.
Not declaring cash income is tax evasion, and a criminal offence. So it is never worth it.
The FT reported the Taylor Review from the perspective of a householder, paying their cleaner in cash. As it says, there is currently no law against paying in cash. But most householders have been offered one price for a job paid by cheque, and a lower price for cash. It is blindingly obvious that the difference is because the tradesperson will not be declaring the income for tax. And how many householders insist that they pay by cheque (or directly to the yradesperson's bank account)? Not to do so is encouraging tax evasion.
So one of the Taylor Review recommendations is that payments should only be made by a traceable method, effectively forcing recipients to declare the income. One possibility is "cashless, government accredited platforms" which would presumably also allow a form of PAYE to be collected as payments are made.
Until there is no such thing as cash, how can you police that tradespeople are not being paid in cash? You can't. But maybe attitudes will change over time, just as they have for drink driving. The phrase "designated driver" just didn't exist a few years ago. Conversely maybe "discount for cash" is a phrase that will disappear.
BUT THAT'S NOT THE END OF IT
There is always a hoo-hah when the media report on a corporate paying less tax than they media think they ought. Sometimes this view is misguided, for example ignoring significant capital expenditure or where start-up costs from previous years can be offset against current profits. .
But one thing is virtually certain. Corporates and their tax advisors don't take the risk of "tax evasion", doing something against the tax law. They will legally "avoid" tax, but that's what everybody does when they can. "Abusive avoidance", where the rules are stretched, is the area of contention. And this is where court cases are needed, and that £9billion is returned.
So we have corporates who are "avoiding" tax, but rarely "evading" it. But the general public regularly "evading" tax and avoiding it as much as possible too. A few businesses potentially underpaying millions. Or millions underpaying a few quid. The end result is much the same.
But when there is a hoo-hah about a corporate, I always wonder. How many of those shouting are throwing stones in a glass house, having avoided or evaded tax themselves?
In any case, businesses and individuals need to pay the taxes we need to fund public services. And before you think we should borrow any more instead, if you hadn't realised it we are paying some £46 billion per year on debt interest already!
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