Tax Avoidance & Evasion
HMRC under scrutiny from MPs 11 April 2018
A subcommittee of the Treasury select committee is to investigate HMRC's approach to tackling avoidance and evasion, and whether the tax body is fair to both businesses and individuals.
Tax Avoidance and Evasion The Treasury Sub-Committee will scrutinise the steps that HMRC has taken to address public concerns about the actions of individuals and businesses determined not to pay their fair share of tax. It will examine the amount of tax lost to avoidance and offshore evasion.
It will also look at whether HMRC has the resources, skills and powers needed to bring about a real change in the behaviour of tax dodgers and those who profit by helping them.
The Conduct of Tax Enquiries and the Resolution of Tax Disputes HMRC carries out enquiries to check in detail that the information on a tax return is correct and complete. This may reveal disagreements about the amount of tax due. In its code of governance for resolving tax disputes, HMRC outlines internal governance processes that are intended to ensure that it deals with all tax disputes fairly and in an even-handed manner. Nevertheless, some people question whether HMRC does 'sweetheart deals' with (and shows preferential treatment to) big business, and others feel that they have received harsh treatment from HMRC. The Treasury Sub-Committee will examine whether HMRC’s approach to conducting tax enquiries, resolving tax disputes, and determining the amount of tax to be paid meets the standards set out in its code of governance. This will also cover agreements reached outside HMRC's formal enquiry process.
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Tax evasion merits more focus, says CIOT 15 June 2018
The CIOT has argued in written evidence to the Treasury Sub-Committee’s Tax Avoidance and Tax Evasion Inquiry that HMRC should direct more resources to tackling illegal tax evasion activity given its persistence in Tax Gap figures, rather than simply pile on legislative changes. While tax avoidance has reduced considerably over the last few years, tax evasion due to illegal activity remains broadly constant. Cracking down hard on tax evasion, whether onshore or offshore, should not mean a harsher penalty regime for those who are careless, still less those who are merely confused: different taxpayer behaviours should prompt different HMRC responses, says the CIOT. By contrast it does not matter whether ‘non-compliance‘ has some cross border element that makes it ‘offshore’: offshore or onshore, it is the fact of non-compliance and the type of taxpayer behaviour that prompts it which are important.
Commenting, John Cullinane, Tax Policy Director, said:
“The UK has a relatively low ‘tax gap’ by international standards, but it is important that HMRC continue to focus on this area, to secure the tax base and promote better public confidence in the tax system. Such efforts must be geared to whether the taxpayer’s behaviour is deliberate, careless, or merely confused.”
In its submission to the committee, the CIOT said:
“When implementing new policies to address non-compliance, it is important to differentiate between the different behaviours that caused the non-compliance; in particular, non-compliance could have nothing to do with avoidance or
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