HMRC is prosecuting far fewer individuals for tax dodging than earlier than the pandemic, an influential committee of MPs has warned.
Over the 2 pandemic years, the tax authority accomplished round 1,000 fewer prosecutions for tax-related offences than earlier than the pandemic, a report by the influential Public Accounts Committee discovered.
In 2020–21 and 2021–22, it concluded simply 163 and 236 prosecutions respectively, in contrast with round 700 a yr within the two years earlier than the pandemic.
Whereas courtroom backlogs impacted its skill to wrap up instances, HMRC advised the committee that it was already decreasing the variety of prosecutions it brings, and it was not planning to revive the variety of prosecutions again to pre-pandemic ranges.
“HMRC advised us this was as a result of it thought-about that its felony prosecution powers have been finest used to sort out probably the most severe and complicated instances, quite than massive volumes of smaller instances,” the report mentioned.
HMRC “is just not critically involved that the discount may weaken the deterrent impact,” the report added.
“It argued that the publicity round high-profile convictions, in addition to its use of different enforcement instruments reminiscent of civil powers, is enough to keep up a reputable deterrent. Nevertheless, it doesn’t have a strategy to monitor this,” the report mentioned.
The report additionally discovered that the variety of non-compliance instances opened by the UK’s tax authority fell by 32 % to 1,114,000 for 2020-21.
“We have to see extra effort from HMRC,” Dame Meg Hillier, PAC chairman, mentioned. “It’s merely not doing sufficient to discourage and punish cheats, even at very excessive ranges.”
“We can not and should not arrive at a state of affairs within the UK the place it’s simpler to cheat the tax system than it’s to adjust to it,” she added.
A HMRC spokesperson mentioned: “Our compliance work is on target to guard extra in 2022/23 than in both of the earlier two years.”
“The Nationwide Audit Workplace has recognised that our compliance work presents good worth for cash for the taxpayer,” the added.