Public Accounts Committee (PAC) report on HMRC
A recent report from the PAC expressed dissatisfaction with HMRC’s performance. The report states that HMRC has not clearly demonstrated that it is on the side of the majority of taxpayers who pay their taxes in full, does not use the full range of sanctions at its disposal to pursue unpaid tax, and its measure of the tax gap does not capture all the avoided tax. If further added that HMRC is not doing enough to collect tax credits debt or tackle tax credit error and fraud.
The report states that HMRC needs to strike the right balance between support and enforcement for businesses. (It is not quite clear what the PAC thinks the balance is). The PAC does not think HMRC has considered adequately the impact that measures designed to make the UK a more attractive place for businesses would have on the business structures and tax receipts.
The report makes a number of recommendations including that:
- HMRC should be more willing to pursue prosecutions against individuals and large businesses to test the boundaries of the law and to demonstrate firm action against those who have knowingly misled or withheld information.
- HMRC needs to better understand how companies and their advisers will react to new tax rules and legislation, and prevent unintended consequences. If the department is creating new incentives that may also enable international corporations to avoid tax, then it should be open about any such consequences.
Date: 17th January, 2014
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