Closing a tax gap isn't all that simple
That tax due should be collected is obvious. So the aim seems fair enough. We do, however, think it’s more difficult than many are saying, for as HMRC says:
failure to take reasonable care (30%), error (15%), evasion (13%), legal interpretation (12%) criminal attacks (11%) and non-payment (9%) are among the main behavioural reasons for the tax gap
Non-payment is largely people going bust before making payment. Legal interpretation is people suggesting that perhaps the law isn’t as tightly written as some would think. And so on - there’s no magic bullet here.
But there are also those suggesting it is all too easy, like Margaret Hodge (or, as we like to point out, Dame Margaret, Lady Hodge):
Furthermore, the tax gap does not start to take account of the billions lost each year when global companies such as Google, Facebook and Microsoft avoid tax by creating financial structures that have no other purpose than to avoid paying tax.
That isn’t a gap, that’s just the way corporation tax works internationally. As HMRC have pointed out repeatedly. Profits of American companies are righteously taxed in the US - and since the Trump tax reforms, they are, even if held offshore - in exactly the same way that profits of UK companies - say, those of Vodafone - are taxed in the UK even if earned in other jurisdictions and then brought into the UK. Like, say, profits earned on a German business and then parked in Luxembourg before being brought back into the UK. Just the way that whole system works.
Or this:
We also know that £36bn is a very conservative estimate of the gap between what the exchequer does collect and what is due – what is known as the tax gap. For instance, many wealthy individuals hide their assets in secret trusts they set up overseas in British tax havens – and they pay no tax on that hidden wealth.
Osborne set up a deal with Switzerland, whereby they would comb through every bank account in that country to check that all who should be declaring for UK tax were. The results were less than either stellar or remunerative. The vast, vast, majority of such Swiss accounts were held by Brits who were non-resident in Britain - and therefore did not need to pay tax upon any foreign earnings like from an account in Switzerland - or were non-doms in Britain. For whom a foreign account was a necessary part of that non-dom tax deal, that they do not pay tax on foreign earnings which remain in foreign.
Actual investigation of such claims of vast pots sitting offshore untaxed turn out to be not wholly grounded in reality that is.
We are also reminded of the Liechetenstein Disclosure Facility. If there was some trust, sitting undisclosed, in that secretive jurisdiction then you could declare it, pay the necessary tax and no more would be said. Now, we do not insist that this is absolutely true but the only person we know of who publicly made use of this facility was Dame Margaret, Lady Hodge. There was absolutely no tax due, the arrangements were not made by her originally, no illegality, not even any avoidance and most certainly not anything at all even untoward.
Every attempt to catch these purportedly immense sums running untaxed, wild and free, seems to find very much less of such untaxed pots out in the wild than alleged. Which is as bit of a problem for those who insist that they’ll balance the books through that entirely righteous process of insisting that all should pay the taxes they owe.