The fact that the Crown Prosecution Service (CPS) indicated it would no longer treat tax fraud as a “victimless crime” is a clear indication that until the Lib Dems got into government both Labour and the Conservatives believed that tax evasion was a victimless crime.
It turns out that that attitude is the reason that middle class tax evaders have not been facing criminal charges in the courts for their failure to pay their fair share towards the maintenance of our society.
It is certainly welcome news that Keir Starmer, the director of Public Prosecutions, will today promise to “ramp up” the number of cases it pursues by five-fold over the next two years, but the fact that he has to announce this as a major change in policy shows just how lax the last Labour Government were on the issue of tax evasion.
Mr Starmer will add that it is a “long-standing myth” that tax evasion is a victimless crime. “Many would be outraged if money was stolen from their personal bank accounts. So let us work out the cost to every family and every adult in the UK of tax evasion.
Let’s be clear about this, the latest estimate by HMRC suggests that tax evasion costs the UK economy £14bn a year. That is the equivalent of £530 from every household, or £ 769 per family. This is money that could have been used to reduce the cuts.
This change in policy from the last Government comes at the same time as HMRC has stepped up investigations into the way international firms such as Starbucks and Amazon can avoid paying tax by moving profits between different countries. HMRC’s Large Business Service, which investigates 770 of the biggest companies, is now investigating £1bn of tax linked to transfer-pricing issues, up 47 per cent up from £680m in 2011.
Again this is a massive change in policy from the last Labour Government’s failure to do anything about this tax evasion.
Another clear example of the change in attitudes at Westminster that having Liberal Democrats in Government has created is the fact that MPs also plan to question representatives of the biggest accounting firms over their role in helping big companies minimise their tax bills.
A spokesman for the Public Accounts Committee said it would hold a hearing on 31 January, at which senior tax specialists from PricewaterhouseCoopers (PwC), Ernst and Young, KPMG, and Deloitte would testify. The firms are likely to face a hostile grilling which could be damaging for the firms.