ALEX BRUMMER: Tax collection hurts, just ask Angela Rayner

Few people apart from economic and fiscal geeks will make it to page 116 of the Red Book, which accompanies every Budget.

Under the heading ‘Collecting Tax That is Due’, Rachel Reeves and her Treasury team detail how they plan to collect an extra £20.7billion of revenues by empowering HMRC over the next five years.

In an age of ballooning borrowing and debt, collecting due taxes has never been more important. That is the most significant reason why Angela Rayner’s careless handling of an extra £40,000 stamp duty^[1] due on the purchase of her Hove apartment proved so toxic.

Some years ago, I wrote an article for this paper critical of alleged bullying tactics used by HMRC when checking the books of small businesses for VAT.

A few weeks later, a brown envelope arrived from Bootle telling me that I had been chosen for a tax inspection. The focus was on my freelance income as an author, journalist and occasional public speaker and the review would reach back five years. My blood ran cold, even though I was confident that my returns, completed by a firm of accountants specialising in media clients, would stand up to scrutiny. What I hadn’t figured out is how intrusive the inspection would be.

It required me to recover my bank statements for the last five years from NatWest and Santander, credit card statements including the Amex company account used for office expenditures such as Budget documents and travel expenses for colleagues. The inspectors uncovered a handful of unrecorded modest payments from freelance sources over the 60-month period, amounting to very little. As critically, they challenged some of the expenses charged against freelance income.

Bad judgement: Angela Rayner’s careless handling of an extra £40,000 stamp duty due on the purchase of her Hove apartment proved toxic

In the end, the dispute over expenses focused on a room at a mid-priced Marriott Hotel in Bournemouth. The date tallied with an evening speaking engagement.

What troubled the inspectors was that I had been accompanied by my wife. That seemed reasonable because it was a weekend. HMRC insisted that half the bill, of around £140, could not be expensed, even though in most hotels the price of two in a room is the same as one. Perhaps not in Bootle.

What struck me about the process was the amount of HMRC time, energy and legal gobbledegook used to eventually collect a paltry sum, with a minor penalty and uncollected interest rate charge. In contrast, Rayner’s shortfall on stamp duty, even if it has retrospectively been paid up, is a substantial sum (more than the UK average working wage) and an infringement of tax rules whatever the complexities of personal circumstances. It is why the Chancellor is determined to make sure every penny due to HMRC is paid

Going Pop

The departure of tech pioneer Poppy Gustafsson from government after just over a year is disappointing.

As Investment Minister, she is one of the few people on Labour’s front bench with business experience, having helped create, build, and list cyber-security firm Darktrace in London. 

Less creditable was Gustafsson’s decision last year to sell Darktrace to private equity barons Thoma Bravo for some £4billion. 

Such early-stage sales of UK trailblazing tech, developed at our world-class research universities, undercut the nation’s ambition to generate its own Silicon Valley. So, dispiriting.