Democracy Gone Astray

Democracy, being a human construct, needs to be thought of as directionality rather than an object. As such, to understand it requires not so much a description of existing structures and/or other related phenomena but a declaration of intentionality.
This blog aims at creating labeled lists of published infringements of such intentionality, of points in time where democracy strays from its intended directionality. In addition to outright infringements, this blog also collects important contemporary information and/or discussions that impact our socio-political landscape.

All the posts here were published in the electronic media – main-stream as well as fringe, and maintain links to the original texts.

[NOTE: Due to changes I haven't caught on time in the blogging software, all of the 'Original Article' links were nullified between September 11, 2012 and December 11, 2012. My apologies.]

Friday, January 27, 2012

Paying cash in hand is 'diddling the country', says HMRC's Dave Hartnett

In an interview with The Daily Telegraph, Mr Hartnett says that householders have a duty to ensure that other people do not evade paying their share of tax.

Paying a builder or cleaner in cash, allowing them to evade VAT or income tax, will result in even deeper government cuts to public services, he says. People who contribute to the cash economy cannot then complain about austerity measures, he adds.

“Tax provides the funding to run the country: hospitals, schools and everything else,” he says. “Every time someone pays cash in order not to pay VAT, the nation gets diddled.”

Speaking to a newspaper for the first time in 18 months, Mr Hartnett, the Permanent Secretary for Tax at HMRC, signals a major clampdown on the very rich.


Tax inspectors are building up a “head of steam” to raise billions of pounds by closing loopholes that are exploited by rich people, he says.

Campaigns are planned from April on tens of thousands of cash-in-hand builders and well-heeled people who formerly paid tax at the top rate but for some reason have stopped, he says. These follow previous operations involving hospital consultants, home tutors, plumbers and eBay traders, which have pulled in an extra £500 million in tax since 2007.

Mr Hartnett encourages anyone who suspects wrongdoing to telephone the Revenue’s whistle-blower hotline and tip off inspectors.

He says: “Cash has been a problem for a long time. The people who are worried about it should use our whistle-blowing line to tell us. We are getting better and better at finding people who receive cash.”

On Thursday Nick Clegg, the Deputy Prime Minister, called for more taxes on the rich to ease the tax burden on “ordinary, hard-working people”.

Mr Hartnett says there used to be a culture of widespread tax avoidance among corporations which he says is now prevalent among prosperous individuals.

Tax disclosure rules introduced in 2004 had “massively changed the environment for tax avoidance and business”, he says. “We have now got to do the same with individuals”.

Mr Hartnett says the Revenue is now aggressively looking to cut down on tax loopholes that have enabled the rich to avoid paying their fair share.

“There are loopholes for wealthy people which have got to be closed down. We have not yet got the same head of steam up, addressing those loopholes as we have with business loopholes, but we will be there soon.”

Inspectors will gather information on people from the HMRC hotline as well as intelligence on the internet and insurance payment records.

Anyone who is caught out has three months to pay the bill, along with interest and penalties, before facing further action. HMRC is hoping to increase its number of prosecutions for wilful non-payment sixfold to 1,200 next year.

MPs last month accused Mr Hartnett of being “unduly cosy” with big companies and of applying double standards to corporations and ordinary taxpayers.

It was alleged he agreed “sweetheart deals” with companies including Goldman Sachs and Vodafone that allegedly let them off large bills worth millions of pounds to HMRC. Addressing the MPs’ findings in an interview for the first time, Mr Hartnett insists HMRC is operating a “level playing field” and that big firms are treated in a similar way to individual taxpayers.

The Revenue’s “engagement policy” with businesses had persuaded them to pay £25 billion in tax over the past six years which they otherwise would not have done, he claims.

“We are not soft with big business, there was no sweetheart deal with Vodafone,” he said. “We got all the money for the nation that was there to be got.”

Mr Hartnett, who is retiring this summer after 36 years at the department, says the controversy has unfairly damaged the image of HMRC.

He says: “I think it has done a huge disservice to HMRC. It has done a huge disservice to the country. My own people are now more wary about how they engage with large corporate taxpayers, and large corporate taxpayers don’t want to end up on your front page.”

Refusing to disclose his future plans, Mr Hartnett – who will step down with a £1.7 million pension pot – says he is “getting lots of offers” from private sector companies, although he says he is unlikely to join a big accountancy firm.

Denying he was forced to retire, he says: “If I have been forced out no one has told me. I am 61 next month, I have been leading tax in this department for 12 years, it is time for someone else to have a go at it, and I have other things in tax that I want to do.”

Mr Hartnett was dubbed “the most wined and dined mandarin” after it emerged he had been taken out for meals on 107 occasions, often by big companies, in just three years. “Most of them were sandwiches or speaking engagements,” he says.

Meanwhile, HMRC has disclosed that taxpayers will have an extra two days to file their online self-assessment tax returns, after industrial action threatened to affect call centres on deadline day.

Those who file self-assessment returns will not be charged a £100 penalty if they miss the Jan 31 deadline, and will not be required to pay any interest on tax owed until Feb 2, a spokesman said.

This is due to a planned strike on Jan 31 by the Public and Commercial Services Union over contracts being awarded to private sector companies. As many as 7,000 HMRC staff are planning to walk out at its four call centres on Jan 31.

Stephen Banyard, the acting director-general for personal tax, said that he was not extending the tax deadline, just delaying the issue of penalties.

“We’ve always been very clear that we want the returns — not the penalties,” he said. “For that reason, we don’t want anyone who can’t get through for help and advice on Jan 31 to be disadvantaged in any way.” About 600,000 people are expected to file their returns on Jan 31, and about 90,000 people expected to phone the call centres with questions.

Original Article
Source: telegraph  
Author: Christopher Hope 

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