Recommendations & Conclusions
9 items
10
Conclusion
9th Report - Tax evasion in the retail …
Acknowledged
HMRC does not have a specific strategy for addressing tax evasion.23 In 2019 HMRC set its latest strategy to tackle tax non–compliance, which is built of three strands: promoting compliance through education and support; preventing non–compliance by improving policies and systems; and responding when non–compliance occurs.24 HMRC’s overall compliance strategy …
Government response. The government agrees with the committee's recommendation and states that HMRC is looking into a specific strategy for evasion as it might consider a specific strategy for a behaviour if that behaviour requires a particular type of response.
HM Treasury
11
Conclusion
9th Report - Tax evasion in the retail …
Acknowledged
HMRC told us it has some separate and specific strategic approaches to particular types of non–compliance, such as serious fraud and illicit tobacco, but not for tax evasion.26 It told us that evasion is just one element of the tax gap and it wants to tackle all elements of it, …
Government response. The government agrees with the committee's recommendation and states that HMRC is looking into a specific strategy for evasion as it might consider a specific strategy for a behaviour if that behaviour requires a particular type of response.
HM Treasury
12
Conclusion
9th Report - Tax evasion in the retail …
Acknowledged
Previously HMRC had an overall aim to stop the tax gap increasing.29 HMRC told us that it now wants to reduce the tax gap.30 At Autumn Budget 2024, the government increased HMRC’s settlement for 2025–26 by 4.5% in real terms and announced it was investing £1.4 billion over five years …
Government response. The government agrees with the committee's recommendation and states that HMRC wants to reduce the tax gap and highlights investments to increase compliance staff.
HM Treasury
13
Recommendation
9th Report - Tax evasion in the retail …
Acknowledged
HMRC does not have a specific focus on, or explicit objective for, its performance in tackling tax evasion.33 HMRC explained that it is driven by an overall compliance yield target which is designed to close the overall tax gap, but did not tell us whether it has a specific target …
Government response. HMRC will increase its budget by £762 million for 2025-26 to boost compliance and customer service capacity, including investing in IT systems, data and tax practitioners.
HM Treasury
15
Recommendation
9th Report - Tax evasion in the retail …
Acknowledged
At Autumn Budget 2024, the government announced that it was increasing collaboration between HMRC, Companies House and the Insolvency Service to tackle phoenixism.40 The Insolvency Service told us that, since the publication of the National Audit Office’s report, it had started an action group alongside Companies House and HMRC to …
Government response. HMRC will develop a concrete plan to increase collaboration between HMRC, Companies House and the Insolvency Service to tackle phoenixism and will write to the Committee within 6 months to set out its plan.
HM Treasury
16
Recommendation
9th Report - Tax evasion in the retail …
Acknowledged
HMRC and Companies House have explored opportunities from Companies House’s new powers, including a single streamlined system for registering and filing company, Corporation Tax and VAT documentation which would provide more assurance over the addresses of registered businesses. HMRC and Companies House estimated in early 2024 that closer integration of …
Government response. HMRC will write to the Committee in 6 months to update them on plans and progress regarding closer cooperation on company registrations and de-registrations, accounting and filing, as well as sharing risk intelligence and data.
HM Treasury
17
Conclusion
9th Report - Tax evasion in the retail …
Acknowledged
Until April 2024, Companies House had limited powers to check the validity of information provided to it by registered companies. It also had limited enforcement and intelligence–gathering powers, and limited scope to share data with other public bodies. The lack of checks meant it was easy for fraudsters to set …
Government response. The government accepts the case for exploring options to improve the authenticity and integrity of company address information on the register and DBT and Companies House will report to the Committee on progress in November 2025.
HM Treasury
19
Conclusion
9th Report - Tax evasion in the retail …
Acknowledged
Some measures introduced under ECCTA will not be fully operational until Companies House develops the necessary systems and capability, or until further secondary legislation is in place. This includes verifying directors’ identities.53 Companies House told us identity verification will be introduced on a voluntary basis from spring 2025 and become …
Government response. The government accepts the case for exploring options to improve the authenticity and integrity of company address information on the register and DBT and Companies House will report to the Committee on progress in November 2025.
HM Treasury
20
Conclusion
9th Report - Tax evasion in the retail …
Acknowledged
The identity checks that Companies House is now responsible for are not intended to verify the address or place of business.57 Companies House told us that address verification, which it says would be an additional burden on businesses, is not part of ECCTA. It said there was a balance between …
Government response. The government accepts the case for exploring options to improve the authenticity and integrity of company address information on the register and DBT and Companies House will report to the Committee on progress in November 2025.
HM Treasury