HMRC roasted for glacial pace at tackling tax avoiders

HMRC roasted for glacial pace at tackling tax avoiders

Hodge blasts HMRC's action against tax avoiders as "unacceptably slow, putting tax revenues at risk"

MPs HAVE SLAMMED HM Revenue & Customs for its “unacceptably slow” performance in getting tough on tax avoidance and failure to tackle companies exploiting international tax structures to minimise UK tax liabilities.

In a hard-hitting report, Margaret Hodge, chair of the powerful public accounts committee, dubbed HMRC’s action against tax avoiders as “unacceptably slow, putting tax revenues at risk” and that it did “not do enough to tackle companies which exploit international tax structures to minimise UK tax liabilities”.

And she rapped the taxman over the time it took to confront the notorious Liberty tax avoidance scheme saying it had jeopardised up to £10m of the total £400m tax at stake from the 2,000 scheme users, because in 30 cases HMRC had “failed to start inquiries into personal tax returns within the 12 month statutory deadline”.

She also criticised HMRC’s slow progress in acting on information from the Falciani list, which identified 3,600 UK individuals potentially avoiding tax using secret Swiss bank accounts.

The committee also expressed its “astonishment” that a £1.9bn performance measurement error “went undetected by HMRC’s own system of governance and internal audit for three years.”

The taxman said that despite such an epic error it had exceeded its targets every year since 2010.

Hodge urged HMRC to do more to tackle companies which exploit international tax structures to minimise UK tax liabilities: “Recent changes to the UK tax regime, such as those for controlled foreign companies, have been challenged by international bodies like the OECD and European Commission as constituting ‘harmful tax practices.

“These changes, including the introduction of the patent box relief, make it easier for global companies to avoid paying tax in the jurisdictions where they make a profit.

“Some international tax experts believe that the UK’s tests for companies to gain tax residency are less rigorous than in other EU jurisdictions. 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.”

She tasked the Treasury and HMRC with providing PAC with more details of its progress in identifying and addressing ways international tax structures are exploited, and set out the actual costs and benefits of recent changes to the UK’s tax regime.

 

Share

Subscribe to get your daily business insights

Resources & Whitepapers

Why Professional Services Firms Should Ditch Folders and Embrace Metadata
Professional Services

Why Professional Services Firms Should Ditch Folders and Embrace Metadata

3y

Why Professional Services Firms Should Ditch Folde...

In the past decade, the professional services industry has transformed significantly. Digital disruptions, increased competition, and changing market ...

View resource
2 Vital keys to Remaining Competitive for Professional Services Firms

2 Vital keys to Remaining Competitive for Professional Services Firms

3y

2 Vital keys to Remaining Competitive for Professi...

In recent months, professional services firms are facing more pressure than ever to deliver value to clients. Often, clients look at the firms own inf...

View resource
Turn Accounts Payable into a value-engine
Accounting Firms

Turn Accounts Payable into a value-engine

3y

Turn Accounts Payable into a value-engine

In a world of instant results and automated workloads, the potential for AP to drive insights and transform results is enormous. But, if you’re still ...

View resource
Digital Links: A guide to MTD in 2021
Making Tax Digital

Digital Links: A guide to MTD in 2021

3y

Digital Links: A guide to MTD in 2021

The first phase of Making Tax Digital (MTD) saw the requirement for the digital submission of the VAT Return using compliant software. That’s now behi...

View resource