In its annual report on HMRC tax collection, the Public Accounts Committee (PAC) of MPs has basically said that HMRC is afraid to collect from big businesses but is quite happy to pursue the little guys.

There is now a £35 billion tax gap says the PAC despite HMRC promising to crack down on tax avoidance. In fact, according to the PAC, less tax was collected in real terms last year than was collected in 2011/2012.

In pursuing unpaid tax,” said Margaret Hodge, the chair of the PAC, “HMRC has not clearly demonstrated that it is on the side of the majority of taxpayers who pay their taxes in full.

She went on to say that the £35 billion tax gap was growing but still did not take into account money lost to aggressive tax avoidance schemes.

Tax return-companyHMRC holds back from using the full range of sanctions at its disposal. It pursues tax owed by the smaller businesses but seems to lose its nerve when it comes to mounting prosecutions against multinational corporations. It predicted that it would collect £3.12 billion unpaid tax from UK holders of Swiss bank accounts and this figure was built into budget estimates, but in 2013-14 it has so far secured just £440 million. We were astonished that HMRC could not give any reasons for such a shortfall.” She continued.

The PAC made several recommendations in its report such as demonstrating that it deals ‘robustly’ with those people and companies that deliberately mislead it and that it should be more willing to prosecute to ‘test the boundaries of the law’. HMRC should also continue to pursue the tax owed by holders of Swiss bank accounts by pressing the Swiss authorities for more information. It should also ‘better understand how companies and their advisers will react to new tax rules and legislation, and prevent unintended consequences’.

Commenting on this War on Want tax justice campaigner Murray Worthy said:

Today’s report is a damning indictment of this government’s failure to tackle tax dodging by some of the biggest and richest companies in the UK.

Despite all the tough talk on tax from Cameron and Osborne, all we have seen in practice are headline grabbing measures, with no real substance.

In some cases, as the committee has pointed out, the government has actually made it even easier for big business to dodge tax. 

Words will not fund public services or tackle inequality – we need to see much more radical action to end the scourge of tax dodging.”

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