The head of Britain’s trade union movement and the boss of a leading retailer have joined forces to demand the government takes tougher action to catch wealthy tax dodgers. Paul Nowak, general secretary of the Trades Union Congress (TUC), and Julian Richer, founder of the Richer Sounds hi-fi chain, said the public were losing out on up to £36bn a year in taxes owed by companies and individuals that were not being collected. In a joint intervention before next week’s budget – when the chancellor, Jeremy Hunt, is expected to prioritise pre-election tax giveaways – they warned HM Revenue and Customs lacked the necessary funding to chase down businesses and the super-rich for non-payment, avoidance and evasion. They called on Hunt to boost HMRC’s funding so it can drastically increase the number of investigations and enforcement cases it can handle in order to close the tax gap, warning as much as £20bn was being lost to “serious transgressions”. “It’s a national scandal,” Richer told the Guardian, in a joint interview with Nowak at the TUC’s Congress House headquarters in central London. “What really annoys us are these guys ripping off the state. So for me it’s personal. I’m absolutely outraged by what’s going on. “We chase people on benefits who don’t pay – we found money for that. And yet, we’re not spending it on this? It’s absolutely wrong and the great majority of the public are being cheated by this lack of effort.” Throwing the weight of the union movement behind calls to boost HMRC’s resources to chase businesses and wealthy individuals for unpaid taxes, Nowak said: “This is a no-brainer. From a fairness point of view, to support our public services, and to make sure people pay their fair share. “Our members pay their taxes. For them, taxes aren’t optional. HMRC doesn’t show discretion. But here we’ve got tens of billions of pounds that should be going to fund our schools and hospitals that are being wasted.”
The union leader and multimillionaire business owner pointed to figures estimating that HMRC’s tax gap – the difference between what it expects to receive and its actual receipts – increased to £36bn last year. While some of that number relates to common mistakes or carelessness, analysis by the TaxWatch thinktank, which is bankrolled by Richer, shows £20bn comes from more serious transgressions such as criminal attacks, evasion, legal interpretations arguing for non-payment, hiding of economic activity and avoidance. The independent watchdog, which Richer helped to launch after growing angry with Britain’s “broken” tax system, said compliance checks by HMRC were down 20% from pre-pandemic levels amid a lack of funding to carry out checks and depleted morale among staff. It follows a report earlier this month based on data from the Bureau of Investigative Journalism that found the number of investigations by an HMRC fraud unit into offshore, corporate and wealthy taxpayers had fallen by more than half in five years. Nowak said that funding for HMRC had in effect flatlined despite a surge in its caseload to investigate Covid fraud, leading to burnout and inefficiency because staff were overworked and underpaid. “Dealing with some of the abuses around what’s been happening with the Covid recovery funds meant they took their eyes off what was happening with tax more broadly,” he said. “You’ve got a government that currently isn’t really interested in enforcing its own rules, particularly for those who might be donating to its own election campaign.” The TUC and TaxWatch said there was a strong case for funding HMRC because estimates showed that every £1 spent on compliance generated £15 back for the public purse, with the returns rising to as much as £39 for investigations into large companies. Nowak said the lack of funding was emblematic of a wider shortsighted approach under the Conservatives to the public sector, arguing that a lack of money for schools, the health service, police and other services was undermining the economy. Amid speculation that the chancellor could prioritise tax cuts over funding for public services, Richer warned that business leaders would prefer a country with a functioning state. “We’ve got so many things broken in our country, we need to spend more money,” he said. “The NHS is crumbling, dental services are crumbling, the roads are not being repaired, the criminal justice system is falling apart at the seams. Is this a time to cut taxes, really? “It’s just a bribe from a political party trying to get votes.” HMRC was approached for comment.