HMRC not doing enough to stop tax fraud
HM Revenue & Customs have been accused of not doing nearly enough to stop tax fraud, as well as "only limited progress" in reducing the UK's tax losses. This is according to the House of Commons’ Public Accounts Committee (PAC), on one of the hottest topics at the moment.
The PAC said that HMRC’s reporting of its own performance is "too confusing", and has asked the tax office to sort out the public's perception that they're not really doing anything to go after tax from wealthy people.
There's a lot of money lost to this, with tax fraud believed to cost the UK around £16 billion per year. PAC also said that HMRC haven't done enough to reduce this level of loss, which have remained "relatively consistent" over the course of the last five years.
The report didn't pull any punches, saying: "We concluded in November 2015 that the number of criminal prosecutions for offshore tax evasion was still 'woefully inadequate'. HMRC told us that it needs to send the clear signal that anyone who evades tax runs the risk of prosecution."
"The evidence we heard from HMRC did not convince us it properly understands the effectiveness of the different enforcement and deterrent tactics it employs. The failure to prosecute more than one individual from the Falciani list, HMRC having closed this case and the Financial Conduct Authority no longer taking further action, creates the impression that the rich can get away with tax fraud."
Of course, tax talk has become very loud in recent weeks, thanks to the release of the 'Panama Papers', which showed a number of wealthy people able to ferret money away overseas.
PAC has asked HMRC to "clearly set out in its annual reports the relationship between its compliance yields and changes in the tax gap", and that they also need to publish this information "in a way that is accessible for everyone to understand", adding that they need to "increase the number of investigations and prosecutions, including wealthy tax evaders, and publicise this work to deter others from evading tax and to send out a message that those who try will not get away with it".
So what do the HMRC have to say about this? A spokesperson said: "HMRC is one of the most effective tax collectors in the world, getting 93 pence of every pound due. Few other countries have a smaller tax gap.”
"We remain relentless and strategic in tracking down the few that try to get out of paying their fair share. Tackling tax evasion is an absolute priority for HMRC, with 26,000 staff focusing on evasion, avoidance and fraud. We have increased prosecutions of wealthy tax cheats and our crackdown on offshore tax cheats has already brought in more than £2bn since 2010."
"HMRC is currently investigating 1,100 cases of offshore evasion, including 90 criminal cases of which 29 cases are already in the court system, ensuring that no-one is beyond our reach."