U.K. Offshore Tax Enforcement `Woefully Inadequate,’ Panel Says
The number of U.K. prosecutions for offshore tax evasion is “woefully inadequate” and the tax agency, Her Majesty’s Revenue & Customs, is failing to provide lawmakers with the information they need to close loopholes used for avoidance, the House of Commons Public Accounts Committee said.
The agency should also publish and maintain a comprehensive list of the 1,140 types of tax relief identified by the Office of Tax Simplification and identify those which need to be monitored and have their costs and objectives evaluated, the committee said. HMRC currently only lists about 400 of the reliefs, according to the report published in London on Wednesday.
“We are deeply disappointed at the low number of prosecutions by HMRC for tax evasion,” the committee chairwoman, Meg Hillier from the opposition Labour Party, said in an e-mailed statement. “We believe it is important for HMRC to send a clear message to those who seek to evade tax that the penalties will be severe and public.”
There have only been 11 prosecutions for tax evasion since 2010, resulting in a total of 15 years of prison time for the culprits, tax officials told the committee. HMRC needs to strengthen its ability to investigate people hiding their assets offshore to avoid tax and should use prosecutions and “tough” penalties as a deterrent, the panel said.
Aggressive tax avoidance, using loopholes in the law, cost the Treasury 3.1 billion pounds ($4.8 billion) out of a total for uncollected tax of 34 billion pounds in the 2012-13 fiscal year, the panel said, citing HMRC data. If the scale of the losses were better reported it would help Parliament tighten the law, the committee said.
“Tax avoidance also remains a serious concern. Too many avoidance schemes run rings around the taxman, operating legally but gaining advantages never intended by Parliament,” Hillier said. “If tax law is to be improved, then HMRC must as a priority provide Parliament with comprehensive details of avoidance.”
