The cautionary tale of the 79-year-old tax dodger

How much of George Osborne's pledge to cut tax evasion is chest-thumping?

UK chancellor George Osborne has unveiled a budget full of detail on government plans to crack down on tax evasion. The UK government has been banging its drum for some time on the topic, but now it’s released some firm detail on what it intends to do, and in particular its offshore strategy. The question is how much of this is chest-thumping and what will it actually mean?

Here, like in many other areas, it’s useful to see what the US is doing and it’s clear that the UK has taken its lead from across the Pond. The US has had significant success putting the fear into US citizens with assets abroad. The US Internal Revenue Service has netted more than $5bn in back taxes, interest and penalties since 2009. This included the conviction of a 79-year-old former offshore account holder, Mary Estelle Curran, who was fined $21m having failed to report tax of $667,716 on her undeclared offshore accounts (although the accounts did hold $41m so she wasn’t left destitute by the fine!). The HMRC has outlined plans to use similar name and shame tactics to get the desired result.

The message the government and HMRC are trying to send is clear: the government is doing its worst to be a big bad monster and force tax-dodgers to quake in their boots and fess up. The government says it will ‘name and shame’ not only avoiders, but those who help them all – or as David Cameron referred to them in Davos earlier this year: “the travelling caravan of lawyers, accountants and financial gurus”. The aim is to bring in an extra £4.6bn in taxes over the next five years and the tax exchange agreements recently agreed with Jersey, Guernsey and the Isle of Man are expected to bring in more than £1bn of that over the same period.

This seems like a modest amount, and it would be entirely realistic to see this figure edge higher. According to global wealth consultancy WealthInsight the amount of offshore funds held in the UK and Channel Islands by local clients’ stands at about £515bn. Osborne’s figure of £1bn is, therefore, a tiny drop in this ocean of offshore money.

However it’s important to remember that this kind of rhetoric about tax dodgers is not new. Governments have been talking about it for the past seven years, although it’s only now that the regulatory machinery has caught up. There’s little doubt the smart money has already moved to become transparent – those caught in the coming years are likely to be those without Cameron’s ‘caravan’ of sophisticated advisers.

Still it’s important not to underestimate to what lengths the tax authorities will go to claw back revenue. Since 2010 the HMRC has spent £1bn on tax gathering including employing an extra 2,500 staff by 2014-15. And the HMRC is not just targeting high flyers; it recently released a list of evaders who had avoided £25,000 or more. The writing is on the wall. The government coffers need any penny they can scrape together and the HMRC is set to go to what may seem like extreme lengths to claw back all it can get from its taxpayers, at home and abroad.

George Osborne. Photograph: Getty Images
Photo: Getty
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The Liverpool protest was about finding a place for local support in a global game

Fans of other clubs should learn from Anfield's collective action.

One of the oldest songs associated with Liverpool Football Club is Poor Scouser Tommy, a characteristically emotional tale about a Liverpool fan whose last words as he lies dying on a WWII battlefield are an exhalation of pride in his football team.

In November 2014, at the start of a game against Stoke City, Liverpool fans unfurled a banner across the front of the Kop stand, daubed with the first line of that song: “Let me tell you a story of a poor boy”. But the poor boy wasn’t Tommy this time; it was any one of the fans holding the banner – a reference to escalating ticket prices at Anfield. The average matchday ticket in 1990 cost £4. Now a general admission ticket can cost as much as £59.

Last Saturday’s protest was more forthright. Liverpool had announced a new pricing structure from next season, which was to raise the price of the most expensive ticket to £77. Furious Liverpool fans said this represented a tipping point. So, in the 77th minute of Saturday’s match with Sunderland, an estimated 15,000 of the 44,000 fans present walked out. As they walked out, they chanted at the club’s owners: “You greedy bastards, enough is enough”.

The protest was triggered by the proposed price increase for next season, but the context stretches back over 20 years. In 1992, the top 22 clubs from the 92-club Football League broke away, establishing commercial independence. This enabled English football’s elite clubs to sign their own lucrative deal licensing television rights to Rupert Murdoch’s struggling satellite broadcaster, Sky.

The original TV deal gave the Premier League £191 million over five years. Last year, Sky and BT agreed to pay a combined total of £5.14 billion for just three more years of domestic coverage. The league is also televised in 212 territories worldwide, with a total audience of 4.7 billion. English football, not so long ago a pariah sport in polite society, is now a globalised mega-industry. Fanbases are enormous: Liverpool may only crowd 45,000 fans into its stadium on matchday, but it boasts nearly 600 million fans across the globe.

The matchgoing football fan has benefited from much of this boom. Higher revenues have meant that English teams have played host to many of the best players from all over the world. But the transformation of local institutions with geographic support into global commercial powerhouses with dizzying arrays of sponsorship partners (Manchester United has an ‘Official Global Noodle Partner’) has encouraged clubs to hike up prices for stadium admission as revenues have increased.

Many hoped that the scale of the most recent television deal would offer propitious circumstances for clubs to reduce prices for general admission to the stadium while only sacrificing a negligible portion of their overall revenues. Over a 13-month consultation period on the new ticket prices, supporter representatives put this case to Liverpool’s executives. They were ignored.

Ignored until Saturday, that is. Liverpool’s owners, a Boston-based consortium who have generally been popular on Merseyside after they won a legal battle to prize the club from its previous American owners, backed down last night in supplicatory language: they apologised for the “distress” caused by the new pricing plan, and extolled the “unique and sacred relationship between Liverpool Football Club and its supporters”.

The conflict in Liverpool between fans and club administrators has ended, at least for now, but the wail of discontent at Anfield last week was not just about prices. It was another symptom of the broader struggle to find a place for the local fan base in a globalised mega-industry.The lazy canard that football has become a business is only half-true. For the oligarchs and financiers who buy and sell top clubs, football is clearly business. But an ordinary business has free and rational consumers. Football fans are anything but rational. Once the romantic bond between fan and team has been forged, it does not vanish. If the prices rise too high, a Liverpool fan does not decide to support Everton instead.

Yet the success of the protest shows that fans retain some power. Football’s metamorphosis from a game to be played into a product to be sold is irreversible, but the fans are part of that product. When English football enthusiasts wake in the small hours in Melbourne to watch a match, part of the package on their screen is a stadium full of raucous supporters. And anyone who has ever met someone on another continent who has never travelled to the UK but is a diehard supporter of their team knows that fans in other countries see themselves as an extension of the local support, not its replacement.

English football fans should harness what power they have remaining and unite to secure a better deal for match goers. When Liverpool fans walked out on Saturday, too many supporters of other teams took it as an opportunity for partisan mockery. In football, collective action works not just on the pitch but off it too. Liverpool fans have realised that. Football fandom as a whole should take a leaf out of their book.