HM Revenue & Customs is failing UK taxpayers through poor customer service and “inadequate” action on tax evasion, say MPs.
In a damning report published today, the Public Accounts Committee describes HMRC’s customer service as “worse than abysmal” and a genuine threat to tax collection.
In March 2013, the committee said HMRC had an “abysmal record” on customer service, having only answered 74 per cent of calls to its contact centres in 2011-12.
Service levels have since got worse, with an average of 72.5 per cent of calls answered during 2014-15. In the first half of 2015, only half of calls were answered.
The committee says HMRC must identify what impact this is having on tax revenues and produce a plan setting out how and when it will provide an acceptable standard of customer service.
The report also describes the number of prosecutions for offshore tax evasion as “woefully inadequate”. It says HMRC’s failure to gather intelligence on losses through aggressive tax avoidance is an obstacle to improving UK tax laws.
There have been 11 prosecutions in relation to offshore tax evasion since 2010. Only one individual from the list of 3,600 potential UK tax evaders whose Swiss bank account details were leaked by a former employee of HSBC has been prosecuted.
The committee says HMRC’s investigations do not lead to sufficient prosecutions to provide an effective deterrent, particularly for wealthy individuals who hide their assets offshore.
Committee chair and Labour MP Meg Hillier says: “HMRC must do more to ensure all due tax is paid. The public purse is missing out and taxpayers expect and deserve better.
“Tax avoidance remains a serious concern. Too many avoidance schemes run rings around the taxman, operating legally but gaining advantages never intended by Parliament.”
She adds: “HMRC must also rapidly improve its customer service, previously described by the PAC as abysmal and now even worse – to the extent it could be considered a genuine threat to tax collection.
“It beggars belief that, having made disappointing progress on tax evasion and avoidance, the taxman also seems incapable of running a satisfactory service for people trying to pay their fair share.”
A HMRC spokesman says: “We are disappointed that the Public Accounts Committee has overlooked HMRC’s record results, which include collecting £517bn in tax revenues and further reducing the UK’s ‘tax gap’ – the difference between what is due and what is collected – to ensure it remains one of the lowest in the world.
“We explained to the committee that we hadn’t provided a consistent level of customer service in the first half of the year and we had recruited around 3,000 new staff to improve service levels. But these customer service issues did not affect our ability to collect tax.
“Last year, we secured £26bn of additional yield across all our compliance work, ensuring everyone pays what they owe. Tackling tax evasion is a top priority for HMRC and last year alone we successfully prosecuted a record 1,200 cases, resulting in 407 years of custodial sentences.”