MPs slam HM Revenue & Customs for not doing enough to tackle tax fraud

Hayley Kirton
Follow Hayley
General Views Of Government Ministries Around Westminster
HMRC needs to do more to address the perception that it does not punish wealthy people involved in tax fraud (Source: Getty)

A report released today has criticised the UK's tax authority for not making headway in the battle against tax fraud.

The report by the Public Accounts Committee (PAC) said there had been limited progress made in reducing the losses from tax fraud, which costs HM Revenue & Customs (HMRC) around £16bn per year in uncollected taxes.

The PAC slammed the taxman for not having a clear strategy for dealing with tax fraud and that the agency needed to do more to deal with the perception that it does not tackle tax fraud committed by the wealthy.

"The release of the 'Panama Papers' underlines that there are wealthy people and companies who seek to keep their affairs secret," said Meg Hillier, chair of the PAC. "Where this secrecy involves criminal activity, prosecution must follow – and the threat of prosecution must serve as an effective deterrent to others."

Read more: The taxman just binned a £10bn commitment

In light of its findings, the PAC is recommending that HMRC makes it clear in its annual reports what impact its compliance activities have had on changes in the tax gap and to present this information in a way that is easy to understand.

Hillier added: "The department must be far clearer with parliament and the public about its strategy for combating tax fraud and the impact of that strategy on the tax gap. To achieve this it needs a better grasp of its own work."

Read more: HMRC raises an extra £3.5bn from small businesses

A HMRC 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."

A previous report by the PAC, released last November, raised concerns of the lack of prosecutions HMRC had brought for tax evasion and, in particular, described the number of prosecutions brought regarding offshore tax evasion as "woefully inadequate".