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HMRC pursues small firms for tax but "loses nerve" against multinationals

HMRC pursures tax owed by smaller British companies but “seems to lose its nerve” when it comes to prosecutive multinational corporations, Margret Hodge has said.

The chair of the Public Accounts Committee was commenting on the group’s review of tax collection activities and laid into the government department for not using sanctions at its disposal.

Published today, the report criticises HMRC for not collecting data on the cost of aggressive tax avoidance schemes.

It suggested HMRC has “not clearly demonstrated that it is on the side of the majority of taxpayers who pay their taxes in full.”

Margret Hodge said: “Last year the Department collected less tax in real terms than it managed to collect in 2011-12. This was despite the stated ambition to crack down on tax avoidance.

“The tax gap as defined by HMRC did not shrink, but in 2011-12 grew to £35 billion. Yet that measure does not capture all the tax government should be collecting. For instance, this figure does not include all the tax revenue lost to aggressive tax avoidance schemes. “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.

“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.”

This was posted in Bdaily's Members' News section by Tom Keighley .