By Richard Johnstone | 19 December 2013
The Public Accounts Committee has criticised Revenue & Customs for ‘holding back’ on prosecuting companies and individuals that give it misleading information in an attempt to avoid tax.
Analysing the performance of the department, MPs said that the amount of revenue collected fell in 2012/13 compared to the previous year, despite its ambition to crack down on tax avoidance.
In addition, the tax gap – the difference between the amount of tax collected and the amount that should been taken – increased by £1bn to £35bn in 2011/12.
Committee chair Margaret Hodge said that HMRC had ‘not clearly demonstrated that it is on the side of the majority of taxpayers who pay their taxes in full’ when pursuing unpaid tax.
She added: ‘HMRC holds back from using the full range of sanctions at its disposal.
‘It pursues tax owed by the smaller businesses but seems to lose its nerve when it comes to mounting prosecutions against multinational corporations.’
The committee specifically criticised the record of collection of unpaid tax from UK holders of Swiss bank accounts. The department itself estimated it would recover £3.12bn in 2013/14, which was written into budget projections at the 2012 Autumn Statement.
However, so far only £440m has been collected, and the MPs said they were ‘astonished’ HMRC could not explain the reasons for such a huge shortfall.
It must continue to press the Swiss authorities to provide accurate and complete information about amounts held there by UK taxpayers, and pursue more vigorously the tax owed, the HMRC tax collection report concluded.
An HMRC spokesman said it strongly disputed the committee’s conclusions.
‘HMRC seeks to collect the tax that is due from all taxpayers, so that everyone pays their fair share in accordance with the tax laws passed by Parliament,’ he said.
‘We have secured more than £50bn of additional tax from our compliance work since 2010, including £23bn from large businesses. We have carried out 2,345 prosecutions for tax evasion in the last three years, including of high-profile accountants and lawyers, have halved the number of disclosed tax avoidance schemes and have protected more than £2.4bn from marketed tax avoidance schemes this year alone.’
