Recommendation 2

Despite significant lost revenue, HMRC does not have a clear objective or strategy to tackle tax evasion. Rather than a separate strategy to tackle tax evasion, HMRC has an overall compliance strategy which it applies to errors and carelessness as well as to deliberate and wilful non–compliance such as evasion. But these behaviours are very different and therefore require different approaches on the part of HMRC if it is to tackle them. HMRC says it is looking at whether evasion requires its own strategy. Previously HMRC was funded to prevent the tax gap from increasing, although after receiving significant investment at Autumn Budget 2024 it now aims to reduce the overall tax gap, of which evasion is one element, and raise an additional £6.5 billion a year of tax revenue by 2029–30. However, HMRC does not have a specific target to reduce annual losses due to evasion or other forms of deliberate non–compliance. HMRC say that no tax evasion is acceptable. Given this low tolerance for evasion, it is concerning that HMRC has not articulated a goal to reduce it. recommendation a. In its Treasury Minute response, HMRC should set out clearly what its aims are for tackling deliberate non–compliance, including tax evasion, and by how much it is seeking to reduce this by the end of this Parliament. b. HMRC should establish a clear strategy for tackling tax evasion and deliberate non–compliance, in which it makes clear its future ambitions with specific, measurable and timetabled objectives. In doing this, HMRC should consider including how it plans to make use of its existing enforcement tools and introduce clear goals for how it will prosecute tax evaders.