Members of the UK’s Public Accounts Committee have said they are concerned the Revenue has made “little or no progress on a number of important issues”.
The committee pointed to the absence of reports on HMRC’s compliance work.
According to MPs, the British tax office has been unsuccessful in gathering intelligence about the value of tax lost through aggressive tax avoidance schemes.
“We do not accept HMRC’s argument that tracking such avoidance activity is impossible.
"HMRC’s approach of counting revenue it expects to collect in future years in this year’s compliance figures is questionable"
“Based on HMRC’s own definition of what constitutes avoidance, it would be relatively straightforward for this information to be produced to Parliament; there is no reason why it should not be; and in future it should be.”
The committee advised HMRC to identify the value of all tax avoidance schemes so that Parliament can see the scale of avoidance and ensure improvements are made to tax law.
Complicated and confusing
MPs said HMRC’s annual report “remains unnecessarily complicated and confusing” and does not make it “sufficiently clear” how much additional tax revenue is collected from its compliance work.
They pointed out that most people assume ‘cash collected’ is cash actually received, when this figure includes cash not yet received, of which not all is collected.
“In addition, HMRC’s approach of counting revenue it expects to collect in future years in this year’s compliance figures is questionable and may well mislead people into believing that HMRC has recovered more tax than it really has.”
The committee also underlined concerns around tax evasion: “We remain extremely concerned that HMRC’s work has led to too few prosecutions of individuals for tax evasion and that there is, therefore, no credible punishment to deter people from breaking the law in this manner.”
There have been 11 prosecutions relating to offshore tax evasion in five years, and just one of 3,600 individuals from the leaked HSBC ‘Falciani list’ who allegedly concealed money in Swiss bank accounts have been prosecuted.
HMRC argued that the data from the list did not meet the standards required for UK evidence.