The government's pledge to invest 300 million pounds in HMRC over the next five years to bridge the tax gap in the United Kingdom has been described as “completely insufficient” by a leading tax expert, warning that without a long -term strategy and systematic reform, the complex tax system in the country will continue to obstruct progress.
Nimish Shah, CEO of the Audit, Tax and Business Company, Blake Ruthenberg, said that the investment – which is part of the Spring Counselor's statement – “will not scratch the surface” of the treatment of the extensive tax gap in the United Kingdom, which is now standing with a record of 40 billion pounds.
Shah said: “The government's demands for a return three times on this investment in additional tax revenues seem incredibly ambitious,” especially given that HMRC faced repeated criticism from both the government itself and the Public Accounts Committee. “
He pointed out that despite the successive waves of financing over the past decade – including 1.4 billion pounds in the past three years alone – the tax gap has been stubbornly about 5 percent of the total revenue, even with the growth of the total tax receipts. “The result is that the absolute value of the tax gap was not above ever,” he said.
Shah has argued that the tax burden of Britain is now at its highest level in 50 years, being undermined by the continuous HMRC inefficiency and not focusing on an effective collection. He warned that “it is good to increase the government of taxes as it deems appropriate, but without accountability and operating reform in HMRC, the gap will continue to grow.”
As part of the advisor’s plans, the government announced 500 new compliance officers for HMRC and 600 additional employees in debt management, as well as promises to update tax systems through digitization and partnerships with companies. But Shah is still skeptical: “These plans seem reasonable on paper, but HMRC customer service is at the lowest level ever. Phone lines are closed, taxpayers cannot access the correct information, and there is a long way to cut it before we can confidence in these expected returns.”
He believes that the root of the issue lies in the complexity of the UK tax law – the world's longest – and says HMRC is simply unable to keep pace with the size of the new legislation that is presented every year.
“The government needs a suitable tax strategy and direction for HMRC,” said Shah. “Partial investments and bold demands with revenue returns do not inspire confidence. The future advisor who focuses on real reform will take a step back and develop a long-term sustainable strategy-because history indicates that delivering more money in HMRC alone will not address the problem.”
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