The news that HMRC set the compliance yield baseline £1.9bn too low and, as Margaret Hodge says, misled "ministers,parliament and the taxpayer", is, of course, disappointing, especially as it comes after, what the government says is its "best year for collecting tax revenue".
However, closer examination of the figures reveal, in fact, that the tax gap increased by £1bn to £35bn, a figure tax expert Richard Murphy says is nearer £40bn because of company sales being hidden from the taxman. What Hodge also didn`t comment on was that HMRC made "efficiency savings" of £235m., clearly by redundancies. Historically, each tax inspector raises for the Treasury at least two to three times his/her salary in tax, often many times more, so how can it possibly make sense for a government, ostensibly intent on decreasing the tax gap, to reduce their number? The number of HMRC staff in enforcement and compliance fell by 1529 in the years 2010-12. Even if he doesn`t know what 8 times 7 equals, the chancellor should be able to spot this obvious error!