MPs have slated how HM Revenue & Customs (HMRC) deals with taxpayers and the way tackling tax evasion is handled.
In a hard-hitting report, the Committee of Public Accounts has taken HMRC to task over ‘serious and ongoing concerns’.
MPs claim too few individuals and companies are prosecuted for serious tax evasion and blamed HMRC’s inadequate information gathering techniques aimed at putting a figure on losses generated by aggressive tax avoidances for hampering bringing in new tax laws.
Only 11 prosecutions were pursued in the past five years.
The committee also slammed HMRC’s customer service teams as so bad that they are disrupting the collection of taxes.
Too few prosecution for tax evasion
Committee chair Meg Hillier MP said: “HMRC is not doing enough to make sure that all the tax due is paid.
“The number of prosecutions for tax evasion is a disappointment. HMRC needs to let those not paying what they owe that the penalties will be significant and their activities will be made public.
“Tax avoidance is also a worry. Too many clever lawyers and accountants run rings around the tax man, gaining by taking advantage of the rules in ways Parliament never intended.”
Hillier explained Parliament wants to help HMRC crack down on tax cheats, but cannot act because no report is laid before MPs about the scale of aggressive tax avoidance.
The committee recommended HMRC should deliver this information as a priority in 2013.
Shocking customer service
MPs also revealed the shocking service HMRC offers taxpayers telephoning call centres.
In March 2013, HMRC admitted 74% of calls were answered in 2011-12.
In 2014-15, this dropped to 72.5% of calls and in the first six months of this year the figure was less than half.
“HMRC is not providing effective service to customers and cannot say when this might improve to an acceptable level,” said Hillier.
“It seems only 39% of calls are answered within five minutes and HMRC’s target of 80% of calls answered in five minutes still falls short of what we consider acceptable. Previously the committee described HMRC’s customer service as abysmal and now it’s even worse”
HMRC says the report is disappointing and ignores the fact that the gap between taxes owed and tax collected is one of the narrowest in the world and that 3,000 new customer service staff have been recruited.