Tax cheats and benefit cheats

There has been much discussion about whether government treats benefit cheats relative to tax cheats fairly.

Both set out to worsen the public finances by deception – the one by withholding money due, the other by taking money they are not entitled to. Most of us think they should both be traced and dealt with by the authorities. I see no moral superiority or inferiority in the tax evader over the benefit thief.

For both categories of criminal I think the penalties should usually be financial. Their crime is financial. The reason we do not like their crime is because it leaves the rest of us worse off, as we have to pay for the falsely claimed benefit and make good the shortfall on tax from the evaders. Putting them in prison would mean we will be even worse off, as we will then have to pay to maintain them in prison, and they will not be able to earn to make a contribution. Prison would only be appropriate if there were aggravating factors, like using threats of violence or repeat offences.

There is then the difficult issue of the size of the fine or financial penalty. Clearly the fine a rich tax evader can pay could be a lot larger than the fine a benefit cheat could pay. The benefit cheat should not be expected to pay such a sum that it removed their incentive to go to work and get themselves sorted out financially. The fine a tax evader has to pay should be a penalty rate so that it hurts financially.

The benefit cheat may need assistance to go to work and to pay more of his or her own bills. Getting the balance right is difficult. There should be a penalty for theft, but success surely is getting them to eschew benefit theft in future and to provide more for themselves. We want the taxpayer to pay less for them, not to end up paying more. The tax evader needs a strong warning that cheats do not prosper.Making him pay say twice the amount of tax evaded as a penalty on top of the original bill should hurt. Putting him on to tougher and tighter financial reporting requirements in future would also be a good idea.

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61 Comments

  1. Lifelogic
    Posted February 13, 2015 at 6:20 am | Permalink

    Indeed where there is clear evidence that the tax payer/benefit claimant has intentionally deceived the authorities the fines should be stiff.

    But many of the cases in the press are simply where the tax law is absurdly unclear & revenue has decided retrospectively that some structures are too “artificial” and done only for reasons of saving tax (what is wrong with that). The dreadful GAAR rules essentially make HMRC able to decided the tax laws whatever they want them to be depending on how the officer feels that day. Tax inquiries can be a huge burden and a self defeating distraction to perfectly honest business people. Make the taxes lower and simpler you will get more tax not less and need far fewer tax lawyers and tax experts.

    On Newsnight last night we had another totally absurd interview by the increasingly bizarre Evan Davis of Nigel Farage – mainly about gays kissing in parks, page three and trying to brand him a Thatcherite!

    Then they point to a survey suggesting that 62% of the public want the government to do more when asked. Well of course they want their bins emptied more efficiently, shorter waiting times at A&E and a better policing.

    It is of course a totally stupid question most people want better and more public services when asked but also want to pay less tax and have less government debt.

    The question should be do you want to pay even more tax, have the government borrow yet more and for it to spend (& often largely wasted) even more than the nearly 50% it spends already?

    You then get a rather different answer. Even then the answer has a high spend bias, as people like to sound kind and more generous to others then they actually are in private. It sounds kinder if you say you want to pay more tax and give to charity to help the poor/sick or elderly. They usually mean they want others to pay more not themselves.

    In fact everyone on balance would be far better off with a far smaller and vastly more efficient state doing only the few things that the state can actually do rather better than individuals.

  2. Peter A
    Posted February 13, 2015 at 6:41 am | Permalink

    Simple solutions
    1) benefits set far lower than annualised min. wage. Therefore less incentive to cheat. Welfare should be a safety net, not a way of life
    2) penal system only penalises taxpayer. Recidivism rates are used by many to suggest rehabilitation doesn’t work. I would suggest that those who break the law don’t feel that stretch behind bars is too frightful. Make prison penal and less luxurious and therefore costly to the tax payer and it will function better.
    3)as per tax avoidance. This is not easy to do and will typically be instituted by a specialist company with specialist knowledge. Attack the specialist . eradicate the loopholes. Simplify the system.
    4)if the tax avoider is a public figure; such as many of those being paid astronomical amounts by the tax payer through the bbc. Shame them and deny them work with BBC

    • Narrow Shoulders
      Posted February 13, 2015 at 8:31 am | Permalink

      Simple yet effective.

      It’ll never happen too many vested interests.

    • agricola
      Posted February 13, 2015 at 9:17 am | Permalink

      Please differentiate between evasion and avoidance. The first is a crime, the second is taking advantage of myriad schemes sanctioned by government to minimise the tax one pays. If a given avoidance scheme is considered inappropriate then change the law.

    • agricola
      Posted February 13, 2015 at 9:24 am | Permalink

      I have always advocated that the UK should have very low corporation and personal tax levels so that in effect we become a tax haven. Lets say 5% and 20% respectively as a maximum. It could boost investment in the UK and make evasion and avoidance worthless activities. It would also mean government spending a lot less, and the almost all in work citizens learning to stand on their own feet, independent of benefit hand outs.

    • Bazman
      Posted February 13, 2015 at 6:58 pm | Permalink

      Welfare should be a safety net, not a way of life? It is unless you have children and even then it is tight.
      Prisons are in general full of illiterate drug addicts and the mentally ill.
      Most of the tax laws are to stop corporations avoiding tax. Complicated is no excuse as anything can be simplified as you do with the other points you mention.
      Will this apply to state owned banks and companies employees masquerading private companies?
      More tax on employees obviously in overpaid jobs they have no intellects to do like yourself.

    • Gareth Wilson
      Posted February 17, 2015 at 5:34 pm | Permalink

      The national minimum wage is currently £6.50 per hour (over 21’s). Jobseekers allowance is £72.40 (over 25’s) per week. So roughly speaking a person on the minimum wage only has to work 11 hours to get past the ‘jobseekers threshold’ as it is. Bearing in mind that most people work about 40 hours, the difference is quite substantial.

      I’m not taking tax into the equation here – jobseekers is income tax free. So long as the minimum threshold is set at a reasonable rate, things are OK as they are. Jobseekers cannot live the life of riley on £72.40 a week.

  3. Richard1
    Posted February 13, 2015 at 7:19 am | Permalink

    Filling the prisons with benefits cheats, tax cheats, TV license non-payers etc makes no sense. Prisons should be for people who commit acts of violence of invade homes. Those people should go immediately, not at their 25th or so offfence.

    • Lifelogic
      Posted February 13, 2015 at 4:53 pm | Permalink

      They often do not go to prison even after 250 offences and those are just the ones they own up to .

      So many crimes are not even really investigated or even reported often. The police, when I have had things to report, seemed desperate to avoid taking any crime report at all – if they possible can do.

      The state does seem very good and efficient at mugging motorist though. 45 seconds over on the meter and you have a fine and the warden is no where to be seen – certainly in London.

  4. Iain Gill
    Posted February 13, 2015 at 7:23 am | Permalink

    Much we could all agree with there John.
    But politicians indicate their prejudices with how they allocate resources for policing and enforcing the rules. And the opposition are correct that far more people are working for the state policing benefits infringements than policing the tax abuses we can see.
    In the same way that hardly any resources go into policing the proper use of work visas by large corporates it’s tantamount to turning a blind eye.
    I believe in policing rules “without fear or favour”, and taking on the big boys breaking the rules as much as the weak rule breakers. But prioritisation of policing resources does not work like that in any of the enforcement organisations from the tax office, immigration and border force, DWP, and so on.
    Some of the banks have been proven to break the rules on a massive scale, yet their leaderships are still doing very nicely.
    Some of us have proven mass immigration rule breaking by some of the outsourcers to the authorities and yet these outsourcers have never been sanctioned.
    In a country where I get 3 points and a fine for pulling through a red light to let an ambulance through it stinks.

    Reply There are similar numbers of officials taking money off us and giving money back to benefit recipients. Labour’s figures are distorted and understate tax compliance work.

    • Iain Gill
      Posted February 13, 2015 at 7:36 am | Permalink

      The proof is in the pudding.
      How many bankers are in jail compared to benefits cheats?

    • Narrow Shoulders
      Posted February 13, 2015 at 8:34 am | Permalink

      Mr Redwood, you did not address the tactic of goimg after the weak not the bigger fish.

      That point was pertinent, well made and of great concern to the electorate.

      • Narrow Shoulders
        Posted February 13, 2015 at 8:11 pm | Permalink

        I note another case of a big fish not paying tax for 20 years yet not being prosecuted has emerged yet the benefits error recipient and lowly paid PAYE serf has the bailiffs hung over them at the earliest opportunity.

        HMRC is a bully, picking on the those least able to defend themselves but scared of the strong.

  5. DaveM
    Posted February 13, 2015 at 7:53 am | Permalink

    People in this country are generally pretty fair-minded and also pretty good at making judgements on what is fair and what is not.

    Most would probably agree that someone who works hard for a pittance should have a bit of extra help, whilst someone who has no inclination to work should get the absolute bare minimum.

    Most would probably also agree that mega-rich people and corporations who avoid tax through greed (not because they need the extra money) are morally in the wrong and should be made to pay their fair share.

    I personally don’t really care what the punishment is, but whatever it may be, you can almost guarantee that the govt and its various agencies will aim at the soft targets who haven’t really done THAT much wrong, purely in order to make it look as if they’re doing something, thereby finishing off people who really just need a helping hand to get out of whatever vicious circle they happen to be in.

    Can we just have a bit of a return to common sense and human nature please? Maybe if schools taught this a bit more, rewarding fairness and integrity rather than giving special treatment to bullies and thieves, we would have a society where people know it’s morally wrong to cheat the system.

  6. Ian wragg
    Posted February 13, 2015 at 8:15 am | Permalink

    Yesterday’s papers says we spend 0.18 % of GDP on policing our borders. Despite illegal immigration costing billions of pounds. It also stated that the Treasury likes mass immigration as it raises GDP. Not per capita income of the indigenous population
    Such activity shows how financially illiterate the liblabcon are
    Why doesn’t CMD, Clogh or Millipede ever mention that multinationals are only following EU rules which we can’t alter.

    • Lifelogic
      Posted February 13, 2015 at 9:13 pm | Permalink

      Policing our borders hardly. The seem to spend quite a lot or money and time just ascertaining that people are not allowed to stay, but then many just stay anyway – so why bother making the determination?

      Within the EU we cannot really police them anyway.

  7. Narrow Shoulders
    Posted February 13, 2015 at 8:27 am | Permalink

    Fiscal punishment over incarceration is definitely the way to proceed.

    Community service to repay what has been stolen from the taxpayer with a repayment rate of minimum wage per hour served would be equitable to all those convicted. All treated the same so no cries of letting the rich off.

    There is the added deterrent to both types of offender that community service makes demands on time that could be more profitably used for leisure or making more money. This intangible fine treats all equally. It is likely that tax cheats’ debts to the taxpayer would require more hours to repay so the deterrent is greater for them

  8. Jerry
    Posted February 13, 2015 at 8:50 am | Permalink

    Not directed at what Mr Redwood said but more of a general comment – can people please describe these peoples actions correctly.

    There are benefits cheats, scroungers, then there are people who make unintended personal/official error.

    Tax evasion (cheats) is illegal, tax avoidance (“scroungers”) is legal, then there are people who make unintended personal/official error.

    Please do not flip-flop between the three because it better suits your argument!

    Unfortunately increasing numbers of both ‘innocent’ taxpayers and benefit claimants who make errors in their official declarations, often due to the over complex codes and regulations, are being labelled as “cheats” and because they are the easy pickings for the investigators they feel the full force of both state and social outrage, many who play the system (the tax avoiders and benefit scroungers) are assumed to have broken the law when actually they are claiming within the rules, whilst because far to many true tax evaders and benefit cheats know the system backwards they manage to escape any meaningful punishment. We all know that politicos love to play the numbers game, for them it is far better to have found 1000 people making a silly mistake that cost the nation little, because it makes out that something has been done. Would it not be better to be straight with the electors, that one big fish is often better than 1000 very small ones?… Not that I’m suggesting that simply/silly mistakes should not be found and corrected.

    • Lifelogic
      Posted February 13, 2015 at 9:26 pm | Permalink

      tax avoidance (“scroungers”) – no not at all.

      Tax avoidance is often the only way for businesses compete in the world market – if it is legal then there is nothing at all wrong with it at all. It is often highly moral and helps the economy and employments on balance. This as the company (or individual) will usually spend/invest the money saved rather better than governments do. Especially this wasteful, spendthrift, pro EU, tax increasing, soft pigs loans, greencrap coalition government only 53 days is it to go.

      The government should change the tax laws if they do not like it or shut up. They should also stop knocking tax havens the non dom rules make the UK one of the best tax haven going (for nondoms). It is sheer hypocricy or moronic ignorance for many MPs and ministers.

      • Jerry
        Posted February 14, 2015 at 10:12 am | Permalink

        @Lifelogic; “tax avoidance (“scroungers”) – no not at all.”

        I think you miss understood what I meant, indeed if the tax avoidance is indeed legal – or indeed the benefits claim is legal- then companies nor people should be pilloried. Although that is not to say that their actions should not go without facing criticism. As you say, if the Government/HMRC/DWP do not like the tax or benefit laws as they are then they should change them, not try and invoke some sort of moral outrage.

    • libertarian
      Posted February 14, 2015 at 8:46 pm | Permalink

      Jerry

      Good post.

      I get really annoyed when the media deliberately mislabel something i.e. tax avoidance & then start a witch hunt . Its the same with so called “benefit scroungers”. There are a vanishingly small number of people who cheat their benefits

      By far the biggest tax evasion is the cash in hand black market which HMRC currently estimates loses the revenue £150 billion per year

  9. agricola
    Posted February 13, 2015 at 9:09 am | Permalink

    Milliband has deliberately mudded the water between evasion and avoidance for his own political ends. Evasion is against the law. Avoidance is taking advantage, in many instances, of government sponsored schemes designed to please the electorate by allowing them to minimise their tax bill. No doubt there are interpretations of some legitimate avoidance schemes that sail very close to the wind, possibly brought about by poorly drafted legislation and brighter financial advisors.

    I am sure that all politicians, of whatever political colour, take advantage of legitimate avoidance as do most citizens. The only difference is that politicians operate on a more advantageous playing field. They should be brought into line with all other tax payers in the UK. No special perks and no special departments at HMRC to look after them.

    For large companies that decide to run their tax affairs in tax havens while physically operating in the UK we perhaps need a new form of tax based on sales. Carefully thought out this could balance the situation on the high street where one privately owned café paying existing taxes has to compete with one whose financial base is offshore and pays next to no tax. And please no more tax holidays given at the behest of whoever is running HMRC at the time.

    Westminster needs to give thought to those of it’s citizens who enjoy tax free status while working for the EU as politicians or civil servants with the exception of those that are out of the UK for more than 183 days in any one tax year.

    There is a very bad trend these days to make retrospective judgements based on current thinking, but in respect of what was permitted a few years past. My thinking is that if Gordon Brown offered a scheme to encourage investment in the arts with tax advantages it was up to HMRC to legitimise it or otherwise at the time, not to try and re-interpret it today. If the scheme is considered to be a bad one then put an end to it tomorrow after due debate in Parliament.

    • agricola
      Posted February 14, 2015 at 3:00 pm | Permalink

      My last sentence in paragraph three has now been given substance in todays article in the Daily Mail which opens with “The taxman with his Snout in the Trough.” Well worth reading and I suspect only the tip of an iceberg comprising the activities of politicians, civil service, and large corporate business. Who is sufficiently untainted to grasp the nettle.

  10. Bert Young
    Posted February 13, 2015 at 9:26 am | Permalink

    The HSBC involvement case exposed by the BBC brought a wry smile to my face . It is not very long ago the BBC were exposed for paying some of their key performers via “companies” enabling the individuals concerned to avoid direct taxation on their income received . It was stated at the time that this practice would cease . Perhaps some “whistleblower” will emerge and disclose whether this has happened . If you live in a glass house it better not to throw stones !!

    • Lifelogic
      Posted February 14, 2015 at 7:34 am | Permalink

      A glass “BBC” house, built off the back of tax payer’s cash, subsidised & unfair competition and a virtual monopoly.

      • Jerry
        Posted February 14, 2015 at 10:42 am | Permalink

        @LL; “[the BBC] a virtual monopoly”

        Actually that is what many used to say about ITV (when they held a monopoly on TV advertising income prior to Ch4 [1]), now many would suggest that mantle has passed to another group of TV channels when nothing bar an encrypted subscription channel is the only realistic choice in town for so many televised Sports. The BBC might now be all but the day-facto PSB monopoly but that was not of their doing, ITV and Ch4 both have a PSB clause in their broadcast licences for each of their primary channels but have been allowed to substantially divest themselves of those responsibilities.

        [1] it was often said by television executives in the 1960s and 1970s that ITV (the then 15 regions/franchise holders) had a licence to print money, such were the returns from advertising revenues!

  11. Bob
    Posted February 13, 2015 at 9:30 am | Permalink

    If tax rates were lower and the rules simpler there would be nothing to avoid, more incentive to work instead of sponging and hundreds of thousands of non-jobs in tax avoidance and HMRC would disappear.

    The Tories have failed to make the case and have capitulated to Labour’s tax and spend ideology.

  12. acorn
    Posted February 13, 2015 at 9:35 am | Permalink

    The US taxes its “citizens” on their worldwide income, you can’t duck out of the US for a year to avoid tax; they have a “tax residency no lapse” rule.

    The facebook guy gave up his US citizenship to avoid taxation on his IPO windfall, so the IRS reckoned. If I remember correctly, the IRS hit him with a few hundred million dollar “exit tax”, when he gave his US passport back.

    No such worries with Tax and Banking institutions in the UK; home of the World’s financial cesspool. You can understand why some dodgy Banks don’t want American “citizens” accounts; it gives the US IRS and DOJ an excuse to start sniffing around.

  13. Roy Grainger
    Posted February 13, 2015 at 9:43 am | Permalink

    Fining big tax evaders will not be sufficient, they will just see it as another financial “investment” with risk attached, if they don’t get caught then they win if they do get caught then they just pay up. Whilst prison is probably not appropriate, an extended and intensive community service punishment combined with public naming may be enough to deter a few of them.

  14. alan jutson
    Posted February 13, 2015 at 10:01 am | Permalink

    The answer here is simplicity.

    Our tax, benefits, criminal and civil law are all, have all been made so complicated, that only a real expert pretends to understand them, then after discussion of any case, some people are still never charged because the prospect of a conviction is deemed to be too low, because the proof element is not deemed to be strong enough.

    Given the huge number of mistakes being made by Inland revenue staff, medical assessments on the disabled, and the extreme time lag that it takes to finally resolve these problems, what more proof can you have that the system is unfit for purpose.

    For years we have had numerous examples of new laws being written, which clever people always seem able to exploit.

    Most of us tend to uphold the spirit of the law, but it would seem more and more push it to the limits.

  15. Kenneth
    Posted February 13, 2015 at 10:30 am | Permalink

    Why can’t the tax cheat or benefit cheat or their family pay for prison costs? I think that if families were made accountable for their wayward kin, we wouldn’t need such a large police force as society would be largely self-policing. This coupled with the prisoner being put to work should deal relieve the taxpayer of most of these costs.

    Also, if we were to drastically reduce tax levels and benefit payments this would considerably lessen the whole problem.

  16. nick
    Posted February 13, 2015 at 10:44 am | Permalink

    MPs need to be added to the list. False reporting being top of the list. Omitting debts, ripping people off with pensions.

    For example, Mr Median on 26.5K has 4.8K of contributions. Paid for 47 years.

    In return, if no more cuts are implemented, he gets back 5.8K for 18 years.

    He’s been ripped off.

    What about expenses cheats? Where’s the claw back?

    • A different Simon
      Posted February 13, 2015 at 10:26 pm | Permalink

      Nick ,

      MP’s must have been actively encouraged by others to bend the rules .

      I suspect the intention was to get the MP to compromise themselves so they could be more easily controlled .

      The party machines seemed to use the expenses crisis as an opportunity to get rid of trouble makers who could not be relied upon to do what they were told .

  17. GStrickland
    Posted February 13, 2015 at 10:46 am | Permalink

    Once again I agree with you.

    But should people who’s crime is financial be rewarded by a peerage? What sort of signal is this sending out to the honest tax payers of this country.

  18. formula57
    Posted February 13, 2015 at 10:55 am | Permalink

    Certainly there is merit in putting the tax cheat “on to tougher and tighter financial reporting requirements in future” and likewise perhaps the benefit cheat should face extra scrutiny and monitoring if making fresh claims.

    Let it not be overlooked that both types of cheat only prosper largely through failures by the government systems, the great ingenuity of some cheats notwithstanding.

  19. alan Wheatley
    Posted February 13, 2015 at 10:59 am | Permalink

    Agreed.

    I think “tougher and tighter financial reporting requirements in future would also be a good idea” is equally appropriate to the benefit cheat.

  20. Francis Lankester
    Posted February 13, 2015 at 11:01 am | Permalink

    Unfortunately by accepting the premise if Miliband’s attack-that avoidance = evasion, the government has surrendered on the principle that we each have a right to minimise our paying tax to a state that wastes billions and it’s one of the ways we keep government honest (well, as honest as possible)

  21. Qubus
    Posted February 13, 2015 at 11:14 am | Permalink

    I think that the reason for the discrepancy between the two rates of punishment for benefit fraud and tax evasion is partly due to the fact that it is so easy to detect a benefit fraud, even a simple low-grade clerk can do it. Detecting tax evasion can be exceedingly difficult because the tax laws are so complicated; it is also often a matter of expert opinion. Wealthy individuals and companies have paid expert lawyers and accountants large amounts of money to set up complicated schemes. Therefore it takes a similarly highly-paid expert to detect this crime, and HMRC is not exactly full of such people; they are often out-classed..

  22. libertarian
    Posted February 13, 2015 at 12:08 pm | Permalink

    Some of you miss the point in some respects.

    Illegal tax evasion by amount is at its worst with the so called “black economy”, cash in hand etc HMRC estimate that £150 billion is evaded this way. Its not benefit cheats, who are a very small part of the problem. Big corporations are estimated to evade £80 billion

    All tax evasion needs to be clamped down on.

    Maybe if our tax system was simplified it would help enormously. Maybe if the public sector actually bothered to hire some senior management worth the name who managed the spending of public money in a far better way, maybe if politicians stopped wasting billions of pounds of tax payers money on vainglorious pork barrel projects.

    Oh and my biggest gripe idiot leftists ( you know who you are) who repeatedly attack the wealthy, wealth creators & business people to wake up and smell the coffee. If you want the wealthy to fund all your public services I would suggest you provide an incentive, i.e. rather than attack them maybe we should encourage MORE wealth creators, more business people etc. Luckily despite the Ed Milliband anti business (words ed) and the Conservative Party war on small businesses at local levels the number of millionaires in the UK has increased by 8% in the last year and EXCLUDING property wealth there are now 400,000 and growing. The number of small businesses in the UK has grown by more than 700,00 in the last 4 years to 5.2 million. This is good as it means tax revenues will rise naturally due to the market in operation rather than forcing stupid tax rises on us which as we all know end up lowering the overall tax take.

    As a country we generate a huge amount of public money, to incentivise it more we need less red tape ( a thing that politicians always promise but never deliver) and we need politicians to stand aside and rather than take our money and then give some back as “bribes” to just minimise the cost of starting businesses. The benefit in the medium term is more tax take, more economic activity and more jobs created.

  23. They Work for Us?
    Posted February 13, 2015 at 12:12 pm | Permalink

    Tax, fines and financial penalties can only be levied on people who have money and/ or assets to pay them. Benefits cheats usually have no assets and any meaningful attempt to impose a financial penalty pushes them below a limit at which the state decides that they need topping back up to it.
    At the other end of the scale recouping taxes from the very rich/ financially astute will fall into the “too difficult” class with years of litigation and/ or movement of assets and domicile outside HMRCs reach explains their policy of a cost benefit approach to pursuing claims. The rest of us are easy meat.

    The dilemma we also face is that there is no proper punishment anymore. Prison is far too easy and the emphasis on 50% remission, so called rehabilitation, early release is too great. Let us not forget that the public are protected from a criminal when they locked up and removed from the system.
    As an example there has been concern about foreign criminals who are raffickers, gang masters and exploit slave labour. The only effective punishment is the ruthles seizure of all assets (the onus being for the “offender” to proove the assets were obtained honestly). Honest assets will of course have a history of declaring them as earnings and profits and paying tax on them. Revocation of permission to stay followed by deportation of the whole family penniliess to face the wrath of the families of the people trafficked might be a deterrent.
    Many criminal and other groups operate a clan system in which the most heinous crime is for the clan to lose money and assets. Loss of assets might be a deterrent to honour killings, enforced marriage, FGM etc and make the practices “not worth it” .

  24. waramess
    Posted February 13, 2015 at 12:36 pm | Permalink

    Such nonsense talked about tax evasion and avoidance that one might be forgiven for thinking it was something new.

    I dare say that everyone in the country has at some time in their lives been guilty of aggressive avoidance or of evasion of tax, which is likely to become widespread under current circumstances.

    VAT is but one tax that begs to be evaded at its present high level. Often the tax is higher than a traders net profit and cash transactions cannot be realistically monitored.

    Shopkeepers take their living costs out of the till and the employed will enthusiastically embrace any new scheme introduced by their employer to avoid payment of their own tax.

    So, why the fuss when we all know the cause?

    The Laffer Curve showed simply that at low levels of tax, evasion would occur where it was an easy option but that as taxes increase the number of people with an incentive to avoid or evade taxes progressively increases until eventually any increase in tax actually results in lower revenues.

    There are two simple ways of reversing this trend: the first is to reduce the size of government and so reduce the amount of tax taken and, the second is to simplify the tax code; neither of which the government appear capable of doing.

    It seems therefore that we tax payers are left with the idiot Cameron lecturing us all on how immoral it is, and of course we all know that and, the Inland Revenue waging a war which history shows they can never realistically win in any meaningful way.

    So, if we can’t reduce taxes to a level where the incentive to evade or avoid is diminished and we do not have the wit to change the tax code then let’s move on. There is a mountain of issues out there the government might be able to change for the better should it put its mind to it.

  25. CHRISTOPHER HOUSTON
    Posted February 13, 2015 at 1:33 pm | Permalink

    The practice of government benefit offices and staff was to minimize payments to British people through misinformation; not informing them of benefits to which they were entitled nor extra benefits they could legitimately apply for. Also deliberate lies as to their entitlement. All this has been well documented over decades;highlighted in great detail by numerous newspapers and in the media generally; has been successfully fought against by housing resident groups;charities and activist groups determined to expose the problem.

    It was often said as a parallel that even if the system had been replaced with some kind of private insurance scheme, companies in this field often did the same activities to the detriment to policy holders. Again, this has been very well documented.

    I do not recall any individual from the government’s welfare system being fined for fraudulent behaviour of this nature nor any individual fined from the private sector. Nor any custodial sentences being made to the wrong doers or any employment lost or any demotions of any sort.

    Judging by the ethical consideration by government in regard to its own behaviour and that of the private sector it is churlish to the nth degree to imprison, fine or deduct monies from claimants. The fact they copycat the topmost reprehensible practice of their betters should not lead to their own personal loss. How were they, how are they to know what is right and proper?

    If government has not investigated a benefit claim properly and pays tax-payer’s money improperly then the Head of the government department concerned should consider his own position.

    #Not enough space or time to write of the shortcomings of the Inland Revenue and its misdeeds.

  26. Margaret Brandreth-J
    Posted February 13, 2015 at 1:46 pm | Permalink

    Objectively there is little moral difference , yet when we see people hungry ,cold , living in huts and they try to get satisfactory living conditions I can’t help feel that justice has not been theirs and they should be treated differently than the greedy rich tax evader. Many are comparing tax evasion with tax avoidance .Here , the difference is systemic and should be addressed via the system.

  27. Denis Cooper
    Posted February 13, 2015 at 2:26 pm | Permalink

    Putting convicted criminals in prison will actually cost the taxpayer less if the deterrent effect means that fewer people are tempted towards crime and so there are fewer of them to be detected and tried and convicted, on the other hand if softer penalties increase the incidence of crime then that will inevitably lead to higher costs for the law-abiding. Of course there will always potentially be mitigating as well as aggravating factors, but I would like to see some of the major financial criminals banged up for very long stretches just to discourage their colleagues from following the same path into crime. It’s not necessary for the crime itself to be violent in order for it to inflict major harm on others and for those responsible to deserve condign deterrent punishment.

  28. ian
    Posted February 13, 2015 at 4:11 pm | Permalink

    I do not consider it a crime, it the system that at fault not the person, it bad management, if you all want to tax people it your responsibility to make sure the system up to the job not the person, the same for benefits. If i go out and leave my door open and get robbed i am at fault and the insurance company will not pay me out. If you want all these votes bribe things you have to pay for them and make sure the system up to the job.

    Going round making people criminals will get you nowhere, You leave the door open for your selfs with mps expenses, pensions and the 12,000 pages tax code which you know by heart to which person in the street is clueless about, It you who should be taking a good hard look at yourselfs in the mirror.

    It like putting food in front of animals and telling them not eat it.

    Your just making people criminals for sake of it. You keep bring out new laws to make more criminals.

  29. David
    Posted February 13, 2015 at 4:37 pm | Permalink

    What about people who chose a lifestyle which needs benefits.
    For example a 16 year girl with poor qualifications might decide being a single mum is better than working at McDonalds.
    She is not cheating the system – she is being honest. However it is hardly a good thing for her to do.
    Or (real case I know off) a single mum in Spain might decide coming to the UK to live off benefits is better than working in Spain.
    In both cases the problem is the system. No one would object to a Spanish rugby player coming here to be paid to play for Harlequins and if our system pays single mums whilst other countries don’t then some of them will come here.

  30. Bazman
    Posted February 13, 2015 at 5:54 pm | Permalink

    Where do bushiness using illegal immigrants to under cut the minimum wage fit it?
    The fines and penalties are quite draconian, but few seem to be prosecuted. Funny how the right whiners have little to say about these cheats in more than one area. Undercutting the working poor, cheating on tax and NI and more often than not on housing, workplace health & safety and of course immigration, which without their illegal employment would not really exist.

    • Edward2
      Posted February 14, 2015 at 12:50 am | Permalink

      Undercutting legitimate law abiding companies who work to the rules and pay their staff at least the min wage.
      I know it sounds odd Baz, but I agree with you on this.

      The fines for employing illegal immigrants are high, over £5000 per person employed, but more needs to be done in raiding these businesses.
      And naming and shaming those who do not pay the legal min wage too.

    • alan jutson
      Posted February 14, 2015 at 9:39 am | Permalink

      Bazman

      Could not agree with you more, legitimate businesses who play by the rules are being undercut by more and more who do not play by the rules.

      Two effects here:

      Those who play by the rules and pay tax can go out of business, so that tax is lost.

      Those who do not play by the rules and employ illegal immigrants who pay no tax (because they cannot register for anything) encourage further illegals to try and enter.

      Have seen the Border agency van working locally, and am aware that three restaurants have been fined heavily recently, so they are about and doing a job, shame there is not more of them.

      Not aware if the illegals were deported or not, if not, then the whole thing really is a waste of money and time.

    • libertarian
      Posted February 14, 2015 at 9:58 am | Permalink

      Bazman

      That post just shows how woefully uninformed you are.

      We in the wealth creating community were at the forefront of getting the practice of employing illegal immigrants AND locals being employed illegally on less than minimum wage addressed.

      There is now a whole organisation GLA who now pursue this plus the Home Office also operate a specialist enforcement unit.

      In 2013 the Home Office issued £80 million of fines

      • Bazman
        Posted February 14, 2015 at 4:36 pm | Permalink

        That that problem solved then. No need for any immigration controls, but do remember to tell that to the many employers caught every week in particular the service industries as they don’t know about all this sterling work.

        • libertarian
          Posted February 16, 2015 at 12:08 pm | Permalink

          Bazman

          Don’t be so ridiculous. No one said that this illegal activity has been solved. You accused business of not caring about it. I just showed you once again that you’re wrong. Legitimate business does indeed care about this as it harms us and our employees.

          Legitimate businesses especially the now 5.2 million of us that exist in the UK detest large corporations manipulating the system and imposing their agenda, we detest tax evaders and those that exploit local and immigrant workers and those who employ people illegally. We particularly dislike those that do “black market, cash in hand work”. All of these things makes life very difficult for those running legitimate business. It heaps extra costs on us to make up the short fall. It imposes further red tape and bureaucracy on already over burdened small business in trying to deal with these issues

          Grow up and join the real world and stop trying to score political points with made up nonsense. You said in your first post that no one bothers to clamp down on this, now you’re saying the opposite. Almost every time you post you contradict yourself.

    • Jerry
      Posted February 14, 2015 at 10:55 am | Permalink

      Bazman; “Where do bushiness using illegal immigrants to under cut the minimum wage fit it?”

      They don’t because they either stop employing illegals, stop paying less than the NMW or go out of businesses (most likely because the owner(s) now lack the funding to run a business or are taking a “holiday” at a HMP establishment) — always assuming that someone who knows about such companies tell the police/HMRC/Home Office hotlines…

  31. ian
    Posted February 13, 2015 at 8:14 pm | Permalink

    Tax evasion a national past time for the elite mps bankers and their friends, it like a competition they have, the skill is to evaed tax and live in the country full time, they spend more time looking for money for tax evasion and doing their job.

  32. carol42
    Posted February 13, 2015 at 10:07 pm | Permalink

    The difference is that tax avoiders are legally trying to keep more of their own money while benefit cheats are trying to get more of ours.

  33. Ed Smith
    Posted February 14, 2015 at 2:36 am | Permalink

    Headline in today’s Guardian: ‘Ed Milliband – I will not back down on on Tax Avoidance’. So what’s (his view ed) about the Guardian/ScottTrust….., about BBC tax avoidance, about deeds of variation? All legitimate but shouldn’t Ed be doing something about them?

  34. bigneil
    Posted February 14, 2015 at 3:29 am | Permalink

    Nice to see a very wealthy man has not paid tax for 20+years, and hasn’t been prosecuted, yet I was sent a demand for £53, while getting absolutely NOTHING after paying in for 45 yr and having had to retire early. Lot easier to go after the low class scum at the bottom of the pile rather than the rich ones at the top.

    • alan jutson
      Posted February 14, 2015 at 9:47 am | Permalink

      bigneil

      Yes 13 years of Labour Government and they were not even aware he existed !

      Now when they do find him, they do not a lot.

      Seems he has found too many loopholes for them to take action, so they prefer to pick the low hanging fruit, as it requires little effort on their part.

      Another example of our system being far too complicated for its own good.

      Same could be said with parking/speeding fines, they know where you live, because you have properly registered your vehicle.

    • Bazman
      Posted February 16, 2015 at 6:33 pm | Permalink

      Maybe his wealth trickled down and it was all for the best? instead of low taxes benefiting the economy imagine how much no tax would benefit us all freeing up wealth creators and setting free markets to help the poor and fund infrastructure/ education projects instead of being wasted on officials and cars.
      Runs for another 2-30K of words and rambling nonsense about the markets, conspiracy theories, Freemasons and moon landings…..

  35. sm
    Posted February 14, 2015 at 4:08 pm | Permalink

    A maximum cap on tax relief at say the £23k.

    Combine NI with PAYE.

    Classify all tax allowances as spending and publish totals.

    Ban all public controlled entities from using avoidance activities unless they have been specifically and unequivocally intended. When they are they should be disclosed.

    Make tax returns & benefit claims public?

  36. Colin Dimmick
    Posted February 16, 2015 at 10:35 am | Permalink

    Can someone explain to me the difference between evasion and avoidance?

    Evasion is a criminal act e.g. failing to declare your full income for tax
    Avoidance is using legal means to reduce tax payable e.g. not smoking, or buying an ISA

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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