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The Guardian view on the tax system: losing trust, missing out on billions | Editorial


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Even as millions are sweating over self-assessment forms ahead of this month’s deadline, HMRC dishes up big dollops of bad news

Leona Helmsley’s greatest wrongdoing was ultimately not her vast tax fraud but to be overheard by her housekeeper declaring: “Only the little people pay taxes.” Rather than the millions she owed the state, the New York property billionaire’s belief that the tax system is merely a glorified tip jar, strictly for mugs, made her infamous in the Reagan years. Of all the affairs of democratic government, only taxes and voting rest so firmly on the principle that all subjects are equal before the law. However unsatisfactory the idea that what GP services, schools, bin collections you get depend on where you live, ‘postcode lottery’ is now an everyday term – but taxation and representation should never be arbitrary.

Which is why Rishi Sunak is sailing in dangerous waters. At this week’s prime minister questions he was tackled by Labour’s Alex Sobel about the reports that the chairman of the Tory party, Nadhim Zahawi, was “forced to pay millions to Her Majesty’s Revenue and Customs [HMRC] to settle a tax dispute”. The prime minister responded that his colleague had “already addressed this matter in full”, but he was wrong. Mr Zahawi is an able communicator, yet on this he has been unforthcoming, not denying the reports about capital gains tax incurred by the sale of a £20m stake in YouGov by a family trust, only saying his taxes “are properly declared and paid in the UK”.

That sounds odd: someone who has fully declared their taxes does not reach a big settlement with HMRC. Ministerial colleagues have said, as Robert Jenrick did this week, that it is a “private matter” and HMRC rightly does not comment on individuals’ tax affairs. Mr Zahawi is not being accused of criminal tax evasion. Yet the very notion that a chancellor of the exchequer – as Mr Zahawi was last summer, serving twice as long as the hapless Kwasi Kwarteng – should be setting the taxes of the country while striking a deal on his own tax affairs would seem an extraordinary conflict of interest. Mr Zahawi may have done nothing wrong, but the public deserves to know the truth. Without some accountability, the tax system will lose a little more legitimacy.

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