In a report examining Revenue & Customs’ progress in improving tax compliance, the MPs highlighted delays in recovering funds from tax avoidance schemes and a relatively lax attitude towards corporate tax residency.
‘Research into seven companies who have recently relocated to the UK for tax purposes showed very little inward investment was generated or jobs created in the UK in return for the tax benefits the companies receive,’ said PAC chair Margaret Hodge.
She called on the Treasury and HMRC should provide the committee with details of progress in identifying and addressing ways international tax structures are exploited.
The PAC drew attention to a £1.9bn error when it established its baseline and set targets for its compliance work.
‘Astonishingly, this significant error in a key performance measure went undetected by HMRC’s own system of governance and internal audit for three years,’ said Hodge.
‘HMRC should make sure the governance arrangements around it performance are sufficiently robust. It should be more transparent about its compliance yield estimates and maintain a comparable measure of compliance yield over time so we are not comparing apples and pears.’
Responding to the report, an HMRC spokesman said: ‘The committee recognises we have addressed their key comments about tax avoidance. The way we now work makes it clear to promoters and users of schemes that we will robustly tackle tax avoidance wherever it happens, so increasingly taxpayers are contacting us to help disentangle them from schemes that simply don't work.
‘We are also effectively challenging multi-nationals, whilst bringing in the colossal sum of £31bn from large business since 2010 alone.
‘We will work closely with the National Audit Office to ensure there is no repeat of the base line error for which we apologised to the committee. However, even taking this into account we exceeded our targets for tackling tax dodgers and criminal gangs every year since 2010.’
