I think it only fair to publish here the following press release issued by HMRC yesterday before commenting on it:
HMRC has responded to today's Public Accounts Committee report on its Annual Report & Accounts 2012-13.
HM Revenue and Customs (HMRC) strongly disputes the conclusions in the Public Accounts Committee (PAC) report and challenges the Committee's selective and misleading use of figures.
HMRC seeks to collect the tax that is due from all taxpayers, so that everyone pays their fair share in accordance with the tax laws passed by Parliament. We have secured more than £50 billion of additional tax from our compliance work since 2010, including £23 billion from large businesses. We have carried out 2,345 prosecutions for tax evasion in the last three years, including of high-profile accountants and lawyers, have halved the number of disclosed tax avoidance schemes and have protected more than £2.4 billion from marketed tax avoidance schemes this year alone.
As a result of HMRC's sustained efforts, the tax gap — the proportion of taxes that are due which are not collected — has fallen from 8.3% in 2005/06 to 7% in 2011/12. If the tax gap had remained at the level it was at seven years ago, we would be collecting £7 billion less each year.
HMRC's methodology for measuring the tax gap is robust and has been endorsed by the International Monetary Fund (IMF). Contrary to what thePAC report says, the published tax gap does include a measure of the tax lost from avoidance, as well as evasion, but it can only measure non-compliance with existing tax law — it cannot estimate how much tax might be due if tax laws were different.
HMRC can only bring in the tax that is due under the law and we cannot collect what is not legally due, however much the Committee might want us to. The Public Accounts Committee already knows that we cannot prosecute multinational companies for activities that are lawful within the international tax framework and has itself acknowledged that the kinds of international tax planning by large businesses that it has reviewed are lawful.
We do not hesitate to take large businesses to court if necessary to secure the tax they owe and would consider prosecution in any case where we suspect that we have been misled or information had been withheld from us. We secured eight court wins against large businesses in the first half of this year alone, protecting over £1 billion of tax from avoidance.
The Controlled Foreign Companies rules protect the UK from tax avoidance through the artificial diversion of profits by UK groups to subsidiaries in countries with very low rates of tax. The rules were enacted by Parliament after extensive public consultation and Parliamentary debate. In his recent Autumn Statement, the Chancellor announced a proposal to strengthen the Controlled Foreign Company rules, which will be put to Parliament in the 2014 Finance Bill.
The Committee's unjustified criticism is not a fair reflection of the dedication of our 65,000 staff, whose work has helped the UK achieve one of the best levels of tax compliance in the world. And it risks undermining the confidence that the compliant majority of UK taxpayers have in the excellent work they do.
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Joseph Goebbels would have been proud of this…
@Theremustbeanotherway – Godwin’s Law fail.
Please try a bit of critical reasoning and actually RTFM.
This response says, in plain English, “We at HMRC act within the confines of the law. that law may be flawed, but it is what it is. If you (Parliament) don’t like what Amazon, Google et al are doing, then try changing the law instead of whining at us and scapegoating HMRC.”
Re the Tax Gap and the measurement of it… Tax Avoidance (however it is defined) doesn’t tend to hinge on the use of loopholes so much as it does on a different interpretation of existing laws and principles. These differences of opinion have to be tested at tribunal, in court and in The Lords. There have been squillions of cases heard down the ages and all of them have one feature in common; although every advocate in every case believed they were correct in their contentions, half of them were wrong. HMRC may believe they have a cast iron case when they go to tribunal, but they’ve no way of knowing. Including such figures in a computation of tax lost would be irresponsible.
The message to the PAC from HMRC is clear – if you want them to assess and collect taxes within the framework of the law, then make law that’s robust enough to deliver the results you seek. Parliament are the legislators, after all. HMRC prepare legislation, but the ideas and policies come from Ministers. Legislators trying to hold the civil service responsible for bad or ambiguous law is laughable, even cowardly.
Margaret Hodge’s heart is in the right place, there’s no denying that. But the approach she has taken must only serve to annoy and demoralise hardworking HMRC staff who are already trying to deal with being annoyed, demoralised and undervalued by Francis Maude.
At some point, people need to stop bashing HMRC and realise the value of that department.
I get no such feedback from HMRC staff
They seem pleased with Hodge. They think she is on their side
I believe they are very grateful for her support when management is shafting them
No, it is not a reflection on the dedication of HMRC staff. It is a justified criticism of the politicians and HMRC bosses who continue to cut the Department.
I saw Lin Homer doing the TV rounds yesterday, regurgitating the very same. Ch4 have since done a “fact check” and basically sided with the HMRC on this.
http://blogs.channel4.com/factcheck/factcheck-mps-cherry-pick-hmrcs-figures/17043
although, over the course of this year I have found I am having to fact check the fact check more regularly.
That’s a remarkably weak fact check
They didn’t look for the alternative evidence, for a start
“That’s a remarkably weak fact check”
That was far more charitable than what I muttered under my breath when I finished reading it. And yes, basically it relies on what the HMRC said with no alternative evidence. I am guessing the few lines at the end about failure to collect from UK holders of Swiss bank accounts was to add a fig leaf of balance to it.