Tackling tax fraud: how HMRC responds to tax evasion, the hidden economy and criminal attacks inquiry
Closed
What the inquiry looked at
“HMRC estimates that losses to tax fraud amount to £16 billion each year. This is nearly half of HMRC's estimate of the tax gap (£34 billion): the difference between the amount of tax HMRC should collect each year and the amount it actually collects. Reducing the amount of tax that is lost due to tax fraud is a high priority for HMRC. To do this it needs to make better use of its data and develop its analysis. HMRC has only partial data on how much of the total yield is derived from its work to counter tax fraud. For example it has more complete information on its work to tackle organised crime than tax evasion. This inquiry assesses HMRC's performance in tackling different types of tax fraud—its use of prosecutions, how it assesses risk and uses data, and its shifting strategy to place more emphasis on measures to prevent losses rather than relying so much on investigating them afterwards.”
The committee's words, from the inquiry page on parliament.uk ↗.
What it found
HM Revenue & Customs (HMRC) is not doing enough to tackle tax fraud, which accounts for at least £16 billion of uncollected tax each year. HMRC has made only limited progress in reducing the level of tax fraud losses which has remained relatively constant over the last 5 years, at around 3% of all tax liabilities. HMRC’s strategy for tackling tax fraud is unclear, particularly its approach to prosecutions where it does not know the number needed to provide an effective deterrent. The failure to prosecute more than one individual from the Falciani list, HMRC having closed this case and the Financial Conduct Authority no longer taking further action, creates the impression that the rich can get away with tax fraud. HMRC also needs to explain why the amount of tax it claims to have recovered from its compliance work rises sharply each year, but the size of the tax gap (the difference between the amount of tax that it collects and how much it should, in theory, collect) stays the same.
What the government said
No government response is linked to this report.
How the inquiry ran
Each dot is a dated item listed on this page, from the inquiry's opening on 9 December 2015 to its close on 12 May 2016.
- Oral evidence 13 Jan 2016
- Report 15 Apr 2016
What it recommended
The committee's recommendations are not listed here yet. Read them in 34th Report - Tackling tax fraud ↗ on parliament.uk.
Evidence
Oral evidence sessions 1
- 13 Jan 2016No witnesses recordedparliament.uk ↗