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Public Accounts Committee: MPs raise concerns over HM Revenue & Customs' annual performance

Oliver Gill
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HMRC Most Wanted Tax Evaders Last Year HMRC
The Public Accounts Committee didn't pull any punches with its annual assessment of HM Revenue & Customs (Source: Getty)

A key parliamentary oversight committee has criticised the taxman's plans to cut costs and urged authorities to lead the way in combating the opaqueness of multinational corporations' tax affairs.

The Public Accounts Committee (PAC) today revealed its conclusions within its annual report on HM Revenue & Customs (HMRC).

Plans are being implemented by HMRC to cut costs by "digitis[ing] the tax system". The PAC said if this initiative fails, HMRC could find itself failing the public in its customer service.

"HMRC is relying on new digital services to transform its business and reduce demand on its call centres. Making a success of this is vital to safeguarding tax revenues and ensuring an acceptable level of customer service.

"It is therefore essential that HMRC avoids repeating the mistakes it made two years ago when it reduced the number of staff in its personal tax service prematurely, resulting in a disastrous decline in customer service," the PAC report concluded.

Read more: HMRC is after nearly £2bn in tax from the UK's richest

PAC chair Meg Hillier added:

The lack of a convincing fall-back plan to safeguard service as HMRC undergoes significant change remains a looming threat to its ability to collect tax from individuals simply trying to pay their fair share.

Contingency planning should not be an optional extra. By the spring we will expect to see evidence that HMRC has agreed measures with the treasury to ensure it is not left playing ‘catch-up’ at taxpayers’ expense.

HMRC responded to the criticism by saying it had "invested heavily in customer services, recruiting more than 3,000 new staff who are also available outside normal office hours".

Read more: HMRC rakes in £3bn by getting people to cough up early

The lack of transparency among multi-national companies was also a cause for concern and the PAC felt HMRC should be leading the charge in corralling other countries to promote a better understanding of corporate tax affairs.

“More broadly, we continue to urge HMRC to do more to improve transparency around its work at home and within the wider tax system," said Hillier. She called it a "startling omission" that the taxman doesn’t collect and analyse data on tax reliefs as a matter of course.

“We call on HMRC to build on the work of our committee, drive the debate internationally about public country-by-country reporting and push for real change in the global tax system,” said Hillier.

A spokesperson for HMRC said that was already at the global cutting edge when it came to cross-broder considerations.

We’ve also led the way on improving global tax transparency and tackling tax avoidance by multinationals.

As a result, for the first time, we are starting to receive details of UK taxpayers' offshore financial accounts in more than 100 countries and can now find out what tax multinationals have paid in each country in which they operate.

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