Tax Dodgers and Benefits Cheats
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What is the main topic discussed in this episode?
Thank you for downloading More or Less from the BBC. This is the version first broadcast on Radio 4. If you're a regular listener to the shorter World Service podcast of More or Less, just letting you know that the final item in this program is one you'll already have heard. Here's Tim Harford. Hello and welcome to More or Less, the show that does for statistics what Sherlock does for crimes. I'm Tim Harford. This week, the mathematics of Willy Wonka's famous competition, has global poverty just been halved overnight, the curiosities of the Eurovision voting system, and is it really true that Boris Johnson is mayor of one of France's largest cities? It's rubbish. It's rubbish. But first... The country's leading politicians have been arguing over what's surely the most important issue of the week, whether Take That's Gary Barlow should hand back his OBE.
A tribunal ruled that he'd participated in a tax avoidance scheme and may have to pay substantial back taxes, along with his manager and two other blokes from Take That whose names nobody can remember.
Howard Donald and Mark Owen.
This is Charlotte McDonald. Charlotte, you're not helping your credibility.
Well, let's get back to the point. Now, we've been wondering about tax avoidance and its illegal sibling tax evasion. Do we put enough effort into catching tax dodgers, both outright frauds and those like Gary Barlow who've attempted to find legal loopholes in the tax rules?
And funnily enough, Evan Davis has been wondering the same thing. Here he is interviewing Mark Garnier, a Conservative MP, on the Today programme. So we're tougher on benefit recipients and cheats and fraud and people who shouldn't claim but do. Are we much tougher on them than we are on people who don't pay their fair share of tax? It's a very interesting question.
If you believe a catchy statistic that's been doing the rounds on Facebook and Twitter, we're far too focused on benefit cheats and don't care about tax fraud at all.
3,250.
Number of staff at DWP investigating benefit fraud of £1.2 billion. 300. Number of staff at HMRC investigating tax evasion of £70 billion plus.
In other words, DWP, the Department for Work and Pensions, have lots of people chasing a modest amount of money, while HM Revenue and Customs have a tiny team chasing a vast amount of money. Normally, of course, claims that have gone viral on the internet are always correct, but I wonder...
You're right to wonder, Tim. The social media post is broadly right about the benefit fraud figures. The DWP says there are 3,250 people investigating benefit fraud. The most recent DWP figures estimate there was £1.1 billion of fraud last year, and the year before that the figure was £1.2 billion.
Tell me more.
With regard to the figure for tax evasion, £70 billion is a pretty controversial estimate. When you think about it, the truth is a bit slippery here. For one thing, there are different flavours of unpaid tax, from outright fraud to honest mistakes to tax avoidance, which HMRC defines as an attempt to bend the law rather than break it to get an advantage that Parliament did not intend.
And Charlotte, you said the figure of £70 billion plus for tax evasion is controversial.
Well, one of the problems is that nobody knows how much tax is illegally evaded because tax wards don't usually confess to all the details. The £70 billion figure comes from a piece of research commissioned by the PCS union, which represents tax inspectors amongst others. Now, there is a methodology behind the number, but the purpose of the research was also to make the case that more money should be spent on staff to investigate tax evasion. This number is also popular amongst tax justice campaigners. But it's a lot more than HMRC's own most recent estimate, which is £15.2 billion a year for tax evasion, the hidden economy and criminal acts. If you include tax avoidance, non-payment of taxes, errors and other issues, some of which are also clearly well worth investigating, you get a tax gap of £35 billion, which is well short of £70 billion.
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Chapters
5 chapters
1
What is the main topic discussed in this episode?
0:00–6:50
2
Are DWP investigators outnumbering HMRC staff chasing tax evasion?
6:50–10:56
3
How accurate is the viral claim comparing £1.2bn benefit fraud to £70bn tax evasion?
10:56–19:53
4
What do official HMRC and DWP estimates say about benefit fraud versus tax fraud?
19:53–24:08
5
Could the HMRC’s reported 30,000 investigators really all be fraud investigators?
24:08–28:16