HMRC Faces Heat from Public Accounts Committee

Representatives of the HMRC, including a tax assurance commissioner and the director of enforcement and compliance, were grilled by a parliamentary committee over the inaccuracy of their numbers, particularly an estimated £35 billion pound ‘tax gap’.

Led by labour MP Margaret Hodge, the House of Commons public accounts committee (or PAC) put the HMRC under the spotlight on October 28th and questioned the representatives over thorny issues such as the HMRCs inability to act against corporate tax avoidance and the secrecy revolving around the HMRC’s relationship with Swiss banks. Hodge labelled the HMRC as ‘institutionally incapable’ during a heated discussion over the loss of billions in unpaid tax.

The HMRC projected that they would recoup over 3 billion in lost tax from Swiss accounts this year, but have so far gained only £440 million, calling into question whether the HMRC have been pursuing this line of tax avoidance far enough.

Hodge said about the gap, “It does not include a lot of what ordinary punters in the street think you should be collecting, particularly in regard to the large corporations. The tax gap is really the tip of the iceberg in the gap between the money that you collect and the money if everyone paid their fair share.”

Hodge also compared HMRC unfavourably to their European counterparts, especially French authorities who had successfully raided the offices of huge corporations who have avoided tax payments such as Google and Microsoft.

The HMRC officials argued that corporations taking advantage of loopholes were a matter for larger institutions such as the G20 or the OECD.

The officials are due to appear before the committee later again this year.

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