Don't Forget Moira

January 31st tomorrow. The final day for filing your 2010 Tax Returns in the U.K, it isn't actually but the public aren't supposed to know that, it's also the last day for settling your 2009-10 tax bill and for paying the first installment of your 2010-11 liability.

But as you are writing out that cheque, which by the way if you leave it until tomorrow you will fall foul of the requirement stating that your liability must be settled by cleared funds on the 31st, just consider for a moment that there is still something like £42bn in taxes unpaid from the tax year 2008-9.

That's something like £1,600 for every household in the country, put that into some sort of perspective the VAT increase on 4th January will cost every household £520 this year.
The 'tax gap' soared under the Labour government, meaning that almost 10% of money owed to the Exchequer goes unpaid.

The gap grew to £42bn in 2008/9 from £38bn in the previous tax year, put another way it means that £9 in every £100 that ought to be collected in revenues is missed or avoided, costing the Treasury massive sums that could have been used to mitigate public spending cuts by the 'evil' Conservatives and their LibDem chums.

Broken down further the figures reveal that errors on self-assessment on income tax accounted for more than £5bn of losses. The amount of uncollected corporation tax jumped by 19% over two years, from £5.8bn to £6.9bn. Believe it or not there are still some people who think accountants are just for the rich.

It's not just the self-employed who are tardy in settling their debts, HMRC estimates that 14% of corporation tax is uncollected, compared to 11.5% in 2006/7.

It's mind boggling really. One of the moral judgements behind the VAT increases was that the revenue generated would be roughly equal to the tax take lost through the black economy. The counter argument of course is that by raising the VAT rate the black economy will grow beyond the current £13bn it costs us as a country in lost tax revenues each year. You can put that to one side though when you look at how much is being lost through what was supposed to be an improved tax collection system. It's another example of how the Labour Government cocked things up.

It's an open secret that the coalition is seriously looking into the possibility of every employee in the country being paid from the HMRC via a system where each employer in the country submits payroll details to HMRC, sends a cheque for the gross amount, HMRC applies deductions and then sends the employees the net amount. This despite the fact that (a) HMRC staff numbers have been reduced year on year for the past decade, (b)unpaid PAYE stands at around £2bn and is therefore the most efficient method of tax collection and (c) HMRC would cock it up.