Financial News

  • 20 December 2013, 12:01

HMRC Failing To Pursue Big Business, MPs Warn

The tax man is too keen to chase small businesses for unpaid tax and is not doing enough to prosecute multinational firms, according to MPs.

The Public Accounts Committee claimed Her Majesty's Revenue and Customs (HMRC) does not know how much tax is lost through aggressive tax avoidance and said it should be more willing to pursue prosecutions.

The committee's chair, Margaret Hodge MP, said: "HMRC has not clearly demonstrated that it is on the side of the majority of taxpayers who pay their taxes in full."

She accused the department of allowing the Tax Gap, the theoretical amount that is not collected, to grow by 1bn in 2011/12 and of not doing enough about it.

She said: "HMRC 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."

The committee's report said inspectors should be "more willing ... to test the boundaries of the law".

"HMRC has not attempted to gather intelligence about how much tax revenue is lost through aggressive tax avoidance schemes," it claimed.

However, Lin Homer, the chief executive of HMRC, has strongly rejected the committee's findings telling Sky News it was a "selective and misleading" report.

She said: "If you look at what our highly skilled tax professionals have done since 2010 they have brought in an extra 50bn of tax revenue and 23bnof that has come from big business so it's just nonsense to suggest that we have lost our nerve and that we are not tough on big business."

The focus on tax avoidance follows on from high-profile cases like Starbucks - which was revealed last year to have only reported taxable profit in the UK once in 15 years.

The company has since promised to pay 20m.

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