‘If the government is concerned about fraud, it would be serious about the £15.2bn that multinational companies hide from the UK via tax havens.’
As the government continues to crack down on so-called benefit fraud and reform the welfare system with stricter measures, newly released statistics by the Department for Work and Pensions (DWP) show that there were almost no recorded cases of disability fraud in the financial year ending 2024.
Disability Living Allowance fraud was just 0.1 percent, rounded off to £0m. Personal independence payment (PIP) cheating was found to be 0 percent in the same period, the data showed.
PIP overpayments represented 0.4 percent, equating to around £90m lost in a year, marking a significant decrease from the previous year, when such overpayments stood 1.1 percent (£200m). The overpayments were said to be mainly due to errors made by the department when allocating award levels at the assessment stage.
In response to the DWP’s figures, Mikey Erhardt, campaigner at Disability Rights UK described PIP fraud as a ‘non-issue.’
“New data shows what we, as disabled people, have known for years – PIP fraud is a non-issue. PIP fraud is now the lowest on record – despite the government placing fraud front and centre of their latest public announcements,” said Erhardt.
A study from the World Bank showed that the pandemic had halted poverty reduction schemes. Photograph: Friedrich Stark/Alamy
The world’s 3,000 billionaires should pay a minimum 2% tax on their fast-growing wealth to raise £250bn a year for the global fight against poverty, inequality and global heating, ministers from four leading economies have suggested.
In a sign of growing international support for a levy on the super-rich, Brazil, Germany, South Africa and Spain say a 2% tax would reduce inequality and raise much-needed public funds after the economic shocks of the pandemic, the climate crisis and military conflicts in Europe and the Middle East.
They are calling for more countries to join their campaign, saying the annual sum raised would be enough to cover the estimated cost of damage caused by all of last year’s extreme weather events.
“It is time that the international community gets serious about tackling inequality and financing global public goods,” the ministers say in a Guardian comment piece.
“One of the key instruments that governments have for promoting more equality is tax policy. Not only does it have the potential to increase the fiscal space governments have to invest in social protection, education and climate protection. Designed in a progressive way, it also ensures that everyone in society contributes to the common good in line with their ability to pay. A fair share contribution enhances social welfare.”
Brazil chairs the G20 group of leading developed and developing countries and put a billionaire tax on the agenda at a meeting of finance ministers earlier this year.
The number of civil tax avoidance leads looked into by HMRC’s Fraud Investigation Service has fallen by almost half in five years, while the number of civil cases it has formally opened has decreased by more than a quarter.
These figures, obtained by the Bureau of Investigative Journalism (TBIJ) under Freedom of Information laws, raise questions about the tax authority’s performance since the start of the pandemic.
The findings follow revelations by TBIJ and the Observer in September that prosecutions following HMRC investigations plummeted by two thirds in five years. TBIJ then revealed in January that HMRC has not charged a single company under a landmark 2017 law to clamp down on corporate tax evasion.
The new figures suggest that the tax authority’s civil enforcement has also declined alongside its use of criminal powers.
Margaret Hodge MP called on HMRC to “finally crack down on egregious tax avoidance and collect the revenues we desperately need”.
In the tax year of 2018/19, HMRC’s Fraud Investigation Service opened 37,273 “risks”, a term used to describe a preliminary inquiry into suspected error or false declaration. In 2022/23, that figure fell to just 21,338 – a 43% decline in five years.
The number of civil cases that were formally opened fell by 28% in the same period, from 17,424 to 12,585.
“The new revelations that HMRC is failing to make up for [declining numbers of criminal prosecutions] by undertaking more civil investigations is just disgraceful,” said Hodge. “These consecutive failures mean tax dodgers and their enablers can continue getting away scot-free.”
Stephen Daly, senior lecturer in corporate law at King’s College London, said: “[The number of] investigations has fallen off a cliff, and that can’t be good … If you don’t enforce the rules, then you create a culture in which people don’t have to worry about their tax returns later being checked.”
Civil inquiries and investigations declined sharply in 2020, when the Covid-19 pandemic interrupted HMRC’s enforcement activity. But despite a significant rise last year, the number of cases remains well below pre-pandemic levels. “If, in fact, this isn’t explained by Covid, then it’s unacceptable,” said Daly.
A HMRC spokesperson told TBIJ that figures relating to its Fraud Investigation Service “do not take account of our overall compliance activity”, including 300,000 interventions opened in 2022/23. They said the authority has recouped £136bn from compliance interventions since 2018/19.
Easy targets?
As well as the general decline in civil cases opened by HMRC’s fraud unit, the number opened by its team for investigating offshore, corporate and wealthy taxpayers has fallen especially steeply, by 56% in five years.
“Even when [HMRC is] opening civil cases, they appear to be going after the easier, lower value targets,” said Fiona Fernie, a partner at tax advisory firm Blick Rothenberg.
Last year, HMRC reached one of its highest ever tax settlements when former F1 mogul Bernie Ecclestone paid £650m after pleading guilty to tax fraud – but that success was “the exception, not the rule”, said Fernie.
Part of the problem is that the UK has an increasingly complex tax code, which makes enforcement action difficult, she said. “The staff are under considerable pressure, we get an increasingly complicated system every year, [and] it’s very difficult to get anybody to keep up with it.”
Robert Palmer, executive director of Tax Justice UK, said another issue was lack of resources. “We know HMRC is underfunded and resources have been diverted for work on Covid and Brexit,” he said.
HMRC estimates that it collects 95% of all the tax owed in the UK, a proportion it says has remained stable in recent years. However, it estimates that the remaining 5% still accounts for about £36bn.
“Parliamentary research shows that when the government invests in HMRC, the return on investment is significant. Until the department is properly funded, vast sums of money owed, often by the richest people and companies, will go unrecovered,” said Palmer.
The Public Accounts Committee last year found that for every £1 spent on compliance, HMRC recovers £18 in additional tax revenue. “The government is missing the opportunity to recover billions in lost revenue by not resourcing compliance,” it said.
People participate in a “march on billionaires” event on July 17, 2020 in New York City. (Photo: Spencer Platt/Getty Images)
“Americans overwhelmingly prefer raising taxes on the ultra-wealthy and huge corporations to making cuts to critical programs like healthcare, medical research, and infrastructure,” said Sen. Elizabeth Warren.
The United States’ astronomical levels of economic inequality are poised to become further entrenched in the coming years as what The New York Timesdescribed Sunday as “the greatest wealth transfer in history” gets underway, with the richest members of the Baby Boomer generation set to pass trillions of dollars in assets on to their descendants—often paying little or nothing in taxes.
“Most will leave behind thousands of dollars, a home, or not much at all. Others are leaving their heirs hundreds of thousands, or millions, or billions of dollars in various assets,” the Times reported. “Of the $84 trillion projected to be passed down from older Americans to millennial and Gen X heirs through 2045, $16 trillion will be transferred within the next decade.”
The newspaper added that thanks to the loophole-ridden U.S. tax system, “heirs increasingly don’t need to wait for the passing of elders to directly benefit from family money, a result of the bursting popularity of ‘giving while living‘—including property purchases, repeated tax-free cash transfers of estate money, and more—providing millions a head start.”
“The trillions of dollars going to heirs will largely reinforce inequality,” the Times observed. “The wealthiest 10% of households will be giving and receiving a majority of the riches. Within that range, the top 1%—which holds about as much wealth as the bottom 90%, and is predominantly white—will dictate the broadest share of the money flow. The more diverse bottom 50% of households will account for only 8% of the transfers.”
1/Months in the making, here's the final cut of my story on the long-awaited wealth transfer, no longer in the future tense: We're closer to 2053 than 1992. Elites are already disbursing to heirs while alive. The masses likely need luck or a paradigm shifthttps://t.co/FDKNafpCyV
Don Moynihan, a professor at Georgetown University’s McCourt School of Public Policy, argued that the Times analysis further demonstrates that “we are not taxing the very wealthy enough.”
The Times noted that individuals in the U.S. can pass nearly $13 million in assets to heirs without paying the federal estate tax, which only applies to around two of every 1,000 American estates.
“As a result, although high-net-worth and ultrahigh-net-worth individuals could inherit more than $30 trillion by 2045, their prospective taxes on estates and transfers is $4.2 trillion,” the Times observed.
The explosion of wealth inequality in the U.S. over the past several decades has prompted growing calls for systemic reform but little substantive action from lawmakers. In 2017, congressional Republicans and then-President Donald Trump contributed to the inequality boom by ramming through tax legislation that disproportionately benefited the wealthiest Americans.
Now in control of the U.S. House, Republicans are trying to make the Trump tax cuts for individuals permanent and eliminate the estate tax altogether—a move that would give the nation’s wealthiest households another $2 trillion in tax breaks.
In April, Sen. Bernie Sanders (I-Vt.) led several of his colleagues in offering an alternative proposal: Legislation that would impose progressively higher taxes on estates worth between $3.5 million and $1 billion, as well as a 65% levy on estates worth more than $1 billion.
“At a time of massive wealth and income inequality, we need to make sure that people who inherit over $3.5 million pay their fair share of taxes,” Sanders said last month. “We do not need to provide a huge handout to multi-millionaires and billionaires. It is unacceptable that working families across the country today are struggling to file their taxes on time and put food on the table, while the wealthiest among us profit off of enormous tax loopholes and giant tax breaks.”
Sen. Elizabeth Warren (D-Mass.), a co-sponsor of Sanders’ legislation, tweeted Monday that “Americans overwhelmingly prefer raising taxes on the ultra-wealthy and huge corporations to making cuts to critical programs like healthcare, medical research, and infrastructure.”
“Congressional Republicans need to get on board,” the senator added.
Americans overwhelmingly prefer raising taxes on the ultra-wealthy and huge corporations to making cuts to critical programs like health care, medical research, and infrastructure. Congressional Republicans need to get on board.
Morris Pearl, a former managing director at the asset management behemoth BlackRock and the chair of the Patriotic Millionaires, stressed in an interview with the Times that structural changes to the U.S. tax code—not just a crackdown on wealthy tax cheats—are necessary to slow the rise of inequality.
“People are following the law just fine. I generally don’t pay much taxes,” said Pearl, whose group has warned that democracy “will not survive” unless the rich are taxed much more aggressively.
Stressing the ease with which rich families in U.S. are able to pass assets on to their heirs tax-free, Pearl told the Times that he currently holds stock that his wife’s father, “who died a long time ago, bought in the 1970s,” an investment that “has gone from a few thousand dollars to many hundreds of thousands of dollars”—unrealized capital gains that are not subject to taxation.
University of California, Berkeley economists Emmanuel Saez and Gabriel Zucman have estimated that $2.7 trillion of the $4.25 trillion in wealth held by U.S. billionaires is unrealized.
“I’ve never paid a penny of taxes on all that,” Pearl said of his inherited equities, “and I may not ever, because I might not sell and then my kids are going to have millions of dollars in income that’s never taxed in any way, shape, or form.”
International fund set up at Cop27 is intended to provide compensation to countries worst hit by climate breakdown
A tax on wealthy Britons of just 0.5% could more than meet the UK’s entire “fair share” contribution to the international loss and damage fund established to support countries worst hit by global climate breakdown, a charity has suggested.
Taxing 5p of every £10 of individuals’ wealth over £1m would raise £15bn a year by 2030, well in excess of an estimated $15bn (£12bn) UK contribution to the new fund, according to an analysis by the anti-poverty campaigners Christian Aid.
The loss and damage fund, established at last year’s Cop27 climate summit in Egypt, is intended to provide compensation for climate-related disasters that are beyond the possibility of adaptation.
Estimates of its potential cost differ, but the range of $290bn-$580bn a year by 2030 is often cited, with a midpoint of about $400bn, taking into account inflation and rising climate impacts. Christian Aid estimates the UK’s “fair share” of this to be about 3.5%, or $15bn.
