Source · Select Committees · Public Accounts Committee
Recommendation 10
10
Acknowledged
HMRC lacks a specific strategy solely focused on tackling tax evasion.
Conclusion
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 covers all forms of non–compliance, which include errors and carelessness as well as more deliberate non–compliance such as evasion, and is primarily tailored around types of taxpayers (such as small, medium– sized or large businesses).25 15 C&AG’s Report, para 1.15 16 Q 34 17 Q 35 18 Q 28 19 Q 53 20 Q 55 21 Companies House strategic intelligence assessment – GOV.UK 22 Q 54 23 C&AG’s Report, para 1.20 24 C&AG’s Report, para 1.21 25 C&AG’s Report, para 1.21 and Figure 2 10
Government Response Summary
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.
Government Response
Acknowledged
HM Government
Acknowledged
2.1 The government agrees with the Committee’s recommendation. Target implementation date: Autumn 2025 2.2 HMRC has set out below the department’s aims for tackling deliberate non-compliance and evasion. 2.3 Deliberate non-compliance and evasion covers a range of activity including deliberately submitting false tax returns, falsely claiming repayments or reliefs, hiding income, gains or wealth offshore, and smuggling taxable goods. 2.4 HMRC’s strategic approach to managing all compliance risks is preventing non- compliance from occurring, promoting good compliance by educating and supporting customers in their tax affairs, and responding to non-compliance. 2.5 Closing the tax gap is one of three ministerial priorities for HMRC, and in the last Budget, the government announced an ambitious package to close the tax gap, raising £6.5 billion in additional tax revenue per year by 2029-30. HMRC is committed to achieving an effective control environment which reduces rates of error, evasion and fraud but does not set specific targets for the different non-compliance behaviours or specific sectors. HMRC’s approach to this in respect of evasion is described in the response to recommendation 2b. 2.6 The government is increasing HMRC’s budget by £762 million for 2025-26 to boost compliance and customer service capacity. This includes investing in HMRC IT systems, making better use of data and raising the standards of tax practitioners, as well as continuing the recruitment of an additional 5,000 compliance staff. At Spring Statement 2025, the government also announced £100 million in new funding for HMRC to recruit a further 500 compliance officers from April 2025. When Phase 2 of the Spending Review is confirmed later this year, HMRC will be able to provide more certainty on its 5-year plans.