The UK Treasury’s Big New Idea: A Tax On Paying Taxes
The UK Treasury’s Big New Idea: A Tax On Paying Taxes
The British state somehow aims to raise more tax by preventing taxpayers from paying their tax.
The acerbic American novelist Lionel Shriver, who lived in the UK for over 30 years, recently moved to sunny Portugal to live there instead. For the sand and the sea? No, because she was sick of wasting her entire life filling out endless stupid forms.
Writing in the Spectator, Shriver revealed a multitude of reasons for her emigrating from a nation clearly in terminal decline, but the final “straw that broke the camel’s British residency” was something surprisingly mundane: a new tax-reporting system being implemented starting this year by His Majesty’s Revenue & Customs (HMRC), the UK equivalent of America’s IRS.
At first sight, this sounds a bit extreme. Is a new method of tax self-assessment really enough to warrant someone fleeing the country? In this particular case, yes it is.
HMRC’s incoming new scheme, applicable from this April, is called Making Tax Digital (MTD) and it is, as Shriver rightly observes, an exercise in “death-by-bureaucracy.” Without going into all the mind-numbing details, MTD commands all self-employed taxpayers earning at least £20,000 per year to cease simply filling in either a simple paper or online form once per year, and instead to file complicated computerized accounts five times per year, together with scanned-in invoices, and much, much more confusing Kafkaesque nonsense besides.
Faced with this prospect, Shriver simply upped sticks and sailed for Lisbon—taking all her lovely tax revenue with her.
I thought: that’s the limit. I refuse. You cannot make me, and if you’re intent on imposing this death-by-bureaucracy, I will leave. So, note to HMRC: please mark me down as one of the loads of self-employed workers ensuring your unreasonable new obligations will backfire for the Exchequer. Articles and comment sections are chocka with older entrepreneurs announcing that, thanks to this onerous, complex and laborious regime, they are retiring early and closing shop … An HMRC spokesman assures us, inanely, ‘Making Tax Digital will make it easier for sole traders … to get their tax right by providing a more real-time overview of their finances, freeing up their time to focus on growing their business’. Really? Why not file 10 times a year, then, or every day?
Shriver is lucky she got out to Portugal when she did. Rumor has it the Treasury will soon want you to file your returns five times a day, like the government-mandated fruit and vegetable servings.
As an example of how byzantine and all-encompassing the new regulations are, consider the case of Tony Pearson, a 71-year-old retiree who, due to insanely obscure reasons no normal mortal can even comprehend, has had his home driveway classed as a small business in the shape of a “dormant limited company” that must file MTD returns regardless of its incomings and outgoings.
Every year, Tony’s driveway makes a net profit of £0, with an income and turnover of £0, and net costs of £0—because it is a home driveway. It is a small, paved piece of land next to his lawn which he and his family use for parking their cars on, not a convenience store, arms manufacturing plant, or leading international advertising agency. But, for daring to own this quite literally common-or-garden facility, HM Government unfathomably consider Tony a small businessman, compelling him to lodge electronic MTD accounts five times per year informing them that he owes them absolutely nothing.
Yet the MTD software necessary to tell the taxman this is not, in itself, generally free. Recent estimates are that the initial switchover fee for using such software will be an average £320 per taxpayer, followed by a £110 annual subscription fee—although some experts warn it could rise to up to four times as much.
Tony could always employ an accountant to file his accounts instead; but the average cost of this service to a UK small business is £1,500. And, thanks to the simple laws of supply and demand, with huge numbers of MTD self-employed taxpayers now due to pass responsibility for filing their impenetrable new accounts over to the professionals, accountants are poised to raise their charges per client by 10 percent; so, it would in theory cost Tony £1,650 per annum just for the privilege of informing HMRC he owes them zero. Tony should just dig up his driveway once and for all, and bury the tax inspector under it.
HMRC’s pathetic “rationale” for introducing MTD is that, somehow, it will earn them an extra £780 million per year from the 4 million or so poor souls due ultimately to be forcibly sucked into it. How?
Imagine a self-employed assassin earns £10,000 in each quarter of the financial year. Under MTD, he reports this income four times per year online, then adds it up in his final fifth end-of-year tax return and files that too. The sum total is £40,000, or £10,000 x4. Under the previous, more sensible, system, meanwhile, this same man picks up a pen, once per year, adds up all his earnings, then fills the resultant total in on his paper tax-return. The sum total is £40,000, or £40,000 x1. It’s the same exact amount!
Even professional accountancy firms state MTD will earn the government no additional money whatsoever. So where does HMRC’s claimed extra £780 million of income come from, then? From imposing a series of escalating fines on confused elderly taxpayers who don’t know how to use computers properly, and can’t afford to hire an accountant.
At first, this sounds like a good wheeze on behalf of HMRC; until you stop to consider the simple fact that many taxpayers, angry at what is effectively a new unannounced tax upon paying tax, will, one way or another, simply stop doing so. Lionel Shriver has gone so far as to flee the country entirely, but others will avoid complying in other, less drastic, ways too.
It seems blatantly predictable that MTD will cost the Treasury cash, not rake in more. It is estimated that British businesses and self-employed persons will have to waste a sum total of 114 hours dealing with setting up this meaningless farrago, 114 hours they could be spending doing something more useful, like actually turning a profit, or firebombing Downing Street; 1 in 7 affected self-employed taxpayers say they will reduce billable hours in order to cope. The Administrative Burdens Advisory Board watchdog has conducted polling demonstrating that 65 percent of affected taxpayers could see “no benefit” in MTD to them whatsoever—and the other 35 percent were probably all accountants planning to hike their fees to take advantage of the first 65 percent.
Is there any way out of this administrative prison? Officially, no, it is compulsory. Unofficially, yes, and the means are laughably obvious to anyone. I accessed a randomly chosen online discussion group for taxpayers who simply refuse to comply, where the following pieces of simple, sweary advice were on offer:
- “Just do more cash[in-hand] jobs. Fuck them. Their plan is to drive all small independent businesses out of business for big corporations so we all beg for the Universal Basic Income to save us from poverty.”
- “My work strangely will show 49k, 29k and 19k [turnovers] by 2028, LOL [these being the declining turnover thresholds for having to participate in MTD from 2026 onwards]. Then I’ll throw the towel in until a decent government comes in.”
- “Nothing. If HMRC won’t accept a bank transfer or cheque, as they have done for the last 20 years without question, then that’s their problem, not mine.”
- “It pushed me to retire early.”
- “We’re keeping our gobs shut [about our true earnings] and not getting taxed!”
- “Waiting for the Russian invasion.”
That’s how bad things are for ordinary taxpayers in Great Britain now: They are actively hoping to be invaded and conquered by Vladimir Putin, because then they will be less unfree.
When he came to power in 2024, Prime Minister Keir Starmer, the complete merchant banker now pushing all this unnecessary idiocy through, promised the country he would lead a government which would “tread more lightly on your lives.” By repeatedly kicking taxpayers in the head with a slipper rather than a jackboot?
Starmer has already been forced into a prior taxation U-turn after farmers kept on killing themselves in despair at his plans to rob them of their family livelihoods, earning him the nickname of “the Farmer Harmer.” The first few self-employed pensioners to top themselves likewise will soon see him dubbed “the Taxpayer Slayer,” and then it’ll be taxation U-turn number two.
Meanwhile, the reasonable question might be asked: If the Treasury really does reckon it’ll get £780 million per year extra in taxpayer income via Making Tax Digital, what are they actually planning to spend it on? Well, according to the latest estimates, MTD has so far cost the state £850 million to set up, rising to £1.3 billion in coming years. So, the taxman needs to implement MTD to raise enough cash just to be able to implement MTD in the first place. Brilliant.
Back in the days when it still at least aimed to be user-friendly, HMRC’s old slogan used to be “Tax Doesn’t Have To Be Taxing.” It does now.
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