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Tax Avoidance UK: HMRC Surveys the Public!

Reactions to last month’s controversial tax deal between Her Majesty’s Revenue & Customs (HMRC) and Google were not too kind.

Public outrage to what many considered a “sweetheart” tax deal was widespread, taking over the media for weeks both in the United Kingdom and the rest of Europe.

Now, HMRC has released the results of a 2015 survey carried out for the first time looking into the UK public’s sentiments vis-à-vis tax avoidance and the organization’s work collecting taxes.

According to HMRC, the purpose of this study was to ask individuals “for their views on the perceived prevalence and acceptability of the use of marketed tax avoidance schemes, and the possible consequences when HMRC contests such schemes.”

The data accrued showed that the UK public, while having some faith in HMRC’s work, remains skeptical with regards to the UK tax authority’s efforts to combat tax avoidance.

A quick review of the 30-page report released this week highlights plenty of concerns for HMRC and puts into perspective the UK population’s position on tax collection in the country.

The UK Public's Opinion on Tax Avoidance

The UK Public’s Opinion on Tax Avoidance

Here are some of the main conclusions drawn from the study, which you can find in its entirety here:

  • 63% of the participants believe tax avoidance is a common practice; however, over 60% believe using tax avoidance schemes is unacceptable and generally unfair to regular taxpayers. The main reasons cited for tax avoidance being unacceptable were: 1) it’s unfair; 2) it’s one’s social responsibility to pay taxes; 3) taxes pay for public services, and; 4) it’s immoral.
  • 37% of the respondents said HMRC does not do enough to combat tax avoidance, while 30% believe HMRC’s current efforts suffice.
  • More than 40% of the individuals surveyed stated they were either unsure or couldn’t agree or disagree to a question on whether or not HMRC is “doing enough to discourage people from using avoidance schemes.”
  • Despite the third point listed here, about 50% of respondents believe HMRC would track down those people avoiding taxes via complex schemes.
  • When discussing consequences or sanctions for individuals using tax avoidance schemes, the surveyed listed several including fines, prison terms, criminal records, closer scrutiny next time around, social stigma, embarrassment, and lawsuits. Most respondents focused on the imposition of financial penalties.

Tax Avoidance - no more?
Following the issuing of these results, several journalists attempted to explain why the UK public views tax avoidance in this way.

According to Vanessa Houlder in a February 22nd The Financial Times piece, “the shifts in the public’s attitude to avoidance are likely to reflect the attention paid to tax avoidance and evasion by politicians and the media in recent years. The views are important because they are likely to feed into people’s willingness to pay their own tax bills.”

Furthermore, Jonathan Ford in a separate The Financial Times article writes that events such as those that have transpired with Google, Amazon and a handful of other multinational corporations tend to “undermine confidence in the process by which disputed tax bills are determined,” forcing “the public [to] distrust the very machinery by which the tax goose is plucked.”

In any case, the results of this first time effort will come in handy to the UK’s tax authority.

Per the report, HMRC will use this data to further “interventions and policies as part of HMRC’s ‘promote, prevent, respond’ approach to tackling tax avoidance.” Furthermore, it will “[contribute] to HMRC’s knowledge base on understanding tax avoiders and supports HMRC activity to close the £2.7bn avoidance tax gap.”

Question: If a similar survey were to be staged in your jurisdiction, what do you think the results would show?