I have published a background note to the various sections of the Taxing Wealth Report 2024 that will address issues relating to the administration of tax in the UK this morning:
Many of the recommendations that will be made by the Taxing Wealth Report 2024 will relate to specific tax reforms required to remove the bias to wealth within the UK's existing tax system. I have already begun publishing these recommendations, and there are still quite a lot to come.
However, passing new legislation is not, in itself, sufficient to ensure that the bias within the UK tax system towards wealth is eliminated. There must, in addition, be reform to the administration of tax in the UK if this goal is to be achieved.
There are a number of ways in which the administration of tax in the UK currently fails to address the bias to wealth within that system.
Firstly, HM Revenue and Customs are themselves underfunded to undertake the tasks demanded of them. This is an issue that needs investigation, and data to make the case for reform on this issue will be published as part of the Taxing Wealth Report 2024.
Secondly, and more importantly in the first instance, the identification of the scale of the bias towards wealth within the tax system requires that considerably enhanced methodologies be used with regard to identification of the UK tax gap and UK tax spillover effects. If you cannot properly identify the cause of a problem, its scale, and its impact, then you are ill-equipped to address it. The recommendations that will be made with regard to these two issues are intended to address significant current deficiencies in both of these areas.
Third, a tax system requires high-quality information if it is to be effective, fair and ethically appropriate. There are good reasons to think that such information is not available to HM Revenue & Customs at present, not least because of deficiencies in:
- Tax returns.
- The information made available to HM Revenue & Customs by companies and Companies House.
- Information exchange systems from banks and others who are in possession of data that would considerably ease HM Revenue and Customs' job when it comes to identifying those who are not declaring their appropriate tax liabilities.
Recommendations will be made on all these issues.
Finally, the current expectation that HM Revenue & Customs be the source of tax policy recommendations, policy enforcer and the appraiser of its own effectiveness in both these roles is inappropriate: it needs to be subject to better independent scrutiny. There will be recommendations on this issue as well.
Together, these streams of work form a significant part of the Taxing Wealth Report 2024.
My intention is that these issues will be addressed in parallel with the making of recommendations for individual tax changes. As a result, on some days there will be both recommendations for specific reforms and recommendations for the reform of tax administration, but I never intend that there be more than two posts on this theme in a day.