HMRC Defends Annual Performance

December 20, 2013 Taxation in UK

LONDON – UK tax authorities have been accused of not doing enough to curb the tax evasion and tax avoidance committed by multinational corporations, but the HMRC has responded saying that the claims are based on selectively picked facts and figures.

On December 19th the UK Public Accounts Committee (PAC) released HMRC Tax Collection: Annual Report & Accounts 2012-13, claiming that the national tax authority does not adequately address the occurrence of tax offenses committed by multinational businesses, and that “…in pursuing unpaid tax, HMRC has not clearly demonstrated that it is on the side of the majority of taxpayers who pay their taxes in full.”

In the newly published report the Public Accounts Committee claimed that over the course of the year the gap between the amount of taxes collected and the theoretical amount which was due to be paid has actually grown compared to last year, now reaching well above GBP 35 billion.

The Committee also said that the actual size of the tax gap is even more striking than the current level suggests, as the HMRC’s calculation does not include any money lost through legal, yet overly-aggressive, tax avoidance.

According to the Public Accounts Committee, the poor collections performance is caused by the fact that “…HMRC holds back from using the full range of sanctions at its disposal… it pursues tax owed by the smaller businesses but seems to lose its nerve when it comes to mounting prosecutions against multinational corporations.”

In addition, the HMRC was accused of overstating the amount of owed taxes it would collect from UK taxpayers hiding assets and funds in undeclared Swiss bank accounts, as only GBP 440 million has been collected while originally it was estimated that GBP 3.12 billion would be bought in.

The HMRC has already responded to the claims, issuing a public statement on the same day, saying that it “…challenges the Committee’s selective and misleading use of figures,” and “…HMRC seeks to collect the tax that is due from all taxpayers, so that everyone pays their fair share in accordance with the tax laws passed by Parliament.”

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