Taxman missing out on billions because of avoidance schemes

Tim Wallace
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A CRACKDOWN on tax avoidance schemes raked in an additional £200m for the government in the last year, according to estimates published yesterday by the National Audit Office (NAO).

But HM Revenue and Customs is still missing out on £5bn from continued tax avoidance – that is, “using the tax law to get a tax advantage that parliament never intended,” though the practice is not illegal.

Despite HMRC introducing 93 new rules to cut down on avoidance, the NAO found no evidence that their usage is falling.

Over 100 new schemes were disclosed in the last four years, and HMRC believes most would be defeated if tested in court, but that takes time to achieve.

“It is inherently difficult to stop tax avoidance as it is not illegal. But HMRC needs to demonstrate how it is going to reduce the 41,000 avoidance cases it currently has open,” said the NAO, calling for HMRC to be more aggressive in bringing in the dodged taxes.

But the NAO did find the larger tax law firms had reduced activity in the sector, promoting fewer schemes to clients.