MPs have criticised HM Revenue & Customs for its “unacceptably slow” action against tax avoiders.
In a report on HMRC’s progress on improving tax compliance and preventing tax avoidance, the Public Accounts Committee says HMRC is putting tax revenues at risk by failing to crack down on avoidance schemes more quickly.
It also says the revenue does not do enough to tackle companies which exploit international tax structures to minimise UK tax liabilities.
The report says that up to £10m of the total £400m at stake from tax avoidance scheme Liberty may not be recoverable because HMRC has failed to act quickly enough.
The scheme began in 2005 and was closed down in 2009, but the case was only taken to a tax tribunal by HMRC this year. In 30 cases, HMRC failed to start inquiries into personal tax returns within the 12-month deadline.
The committee says it is also concerned about HMRC’s slow progress in acting on information from the Falciani list, which identified 3,600 UK individuals potentially avoiding tax using Swiss bank accounts.
It is calling on the revenue to report on the progress it has achieved by using its new powers to tackle tax avoidance, as well as progress in identifying and addressing the ways that international tax structures are exploited.
Committee chair Margaret Hodge says: “HMRC’s action against tax avoiders continues to be unacceptably slow, putting tax revenues at risk.
“The Liberty scheme may be just the tip of the iceberg. Although HMRC says Liberty was an exceptional case among the 750,000 personal tax return inquiries each year, it was unable to tell us how much delays had cost across the different tax avoidance schemes.
“HMRC must do more, faster. It should report on the progress it has achieved by using new powers granted by Parliament to tackle tax avoidance and show that it is using its existing powers with sufficient urgency.”