In a report published today by the Committee of Public Accounts, Hodge said HM Revenue & Customs “must do more, faster” to tackle tax avoidance by using its new powers with “sufficient urgency”.
The report claimed that up to £10m in tax from an avoidance scheme called Liberty may never be recovered because HMRC failed to start inquiries within the 12 month statutory deadline.
“Astonishing”
The UK tax authority was also said to have made a “significant error” when setting targets for its compliance performance by measuring it against a baseline which was £1.9bn too low.
Hodge – who is the chair of the Public Accounts Committee – said it is “astonishing” that this error went undetected by HMRC for three years, and claimed the body had “inadvertently presented misleading information to Parliament about its performance” by exaggerating the extent to which its compliance yield had increased.
She recommended that the authority ensure it increases its transparency about its compliance yield estimates, using “a comparable measure of compliance yield over time so we are not comparing apples and pears”.
HMRC has said delays in recovering the tax from avoidance schemes are partly due to tactics used by scheme promoters.
The Public Accounts Committee summarised its report by saying it welcomed HMRC initiatives, such as the accelerated payments scheme, but “slow progress in other areas has put tax revenues at risk at a time when pressures on the public finances are acute”.
