The Treasury sub-committee says it has serious concerns about the accountability and transparency of HM Revenue & Customs.
A new report from the sub-committee, Closing the tax gap: HMRC’s record at ensuring tax compliance, warns there are “serious questions” about HMRC’s accountability which need to be answered.
It says treating all taxpayers fairly will increase voluntary compliance and is the best way to close the tax gap, which HMRC estimate to be £35bn a year or 8 per cent of the total tax liability.
The report welcomes recent changes to how HMRC deals with large tax disputes made in the wake of controversy over deals struck with big corporations.
Sub-committee chair and Labour MP George Mudie (pictured) says: “It is encouraging HMRC has recognised its processes for settling tax disputes were flawed and is implementing changes. However, serious questions remain about accountability and transparency with respect to HMRC’s governance, both at ministerial level and at board level.
“Taxpayers must have confidence that HMRC is being even-handed at all times, otherwise rates of voluntary compliance with the tax code could suffer.”
In December, Treasury select committee member and Conservative MP Jesse Norman called for HMRC permanent secretary Dave Hartnett to resign over a deal struck with Goldman Sachs which meant the bank ended up paying £10m less tax than it owed. Hartnett remains in the job.
The report also criticises the tax deal struck last year between the UK and Swiss Governments. Under the deal, Swiss authorities would impose charges on accounts held in the country by UK taxpayers. They will collect a one off levy of between 19 and 34 per cent as well as witholding taxes of 48 per cent on interest and other income, 40 per cent on dividends and 27 per cent on capital payments.
It says: “The rates of tax to be withheld from income and capital are lower than the top rates of tax in the UK. This seems to reward those who have deliberately avoided tax over those who have not.”
The sub-committee is part of the Treasury select committee.