HMRC has been criticised these past few weeks by a group of MP’s. The MP’s, who are members of the Public Accounts Commitee (PAC), have said the agency needs to increase tax fraud investigations on the wealthy. This comes after the news that HMRC only investigate around 35 wealthy people a year. Nearly half of the workforce at HMRC investigate tax evasion each year. That’s 26 000 staff, investigating only 35 wealthy individuals each year…
It comes as no surprise to see a retaliation to this, especially so close to the panama papers leak. The leak has shown the public exactly how the rich can exploit offshore tax regimes. Many of the world’s most influential people have been found to evade tax. This includes 12 national leaders and 143 politicians. A $2billion trail alone can be linked back to Russian president Vladimir Putin. David Cameron’s father has also utilised methods of hiding money. He ran an offshore investment to make sure he never had to pay tax in the UK again. It also comes, with absolutely no surprise, that David Cameron has utilised his father’s investment too. The Guardian has a simplified version of events concerning the Panama Papers leak, if you wish to research the subject separately.
Tax Fraud by the super rich results in a loss of over £16million for everyday tax payers each year. The Public Accounts Committee believes that HMRC has not set a clear enough target to tackle this colossal issue. They also want to see changes from the department by November 2016, in order to “counter the belief that people are getting away with tax evasion”. As well this, the PAC calls for HMRC to not only publicise its investigations, but its prosecutions concerning tax fraud. Here’s what Labour MP and Chair of the PAC, Meg Hillier, had to say on the issue when interviewed on BBC Radio 4 today:
“We have long felt that there should be more prosecutions because we think that sends a signal to the honest tax payer who is sweating over their tax returns and also a warning shot to those who are thinking about being fraudulent”
This comes after a report from the PAC last year, in which a number of MPs criticised HMRC, calling the department “woefully inadequate”.
Proposals by HMRC
In a bid to crack down on tax evasion by the wealthy, HMRC has released a new consultation. It aims to crack down on the pressure put on prosecutors to punish corporate companies. Under the new plans, the burden of proof will be given to board level staff of companies. They will have to take the reasonable steps to stop their staff “aiding, abetting, counselling or procurring” tax evasion for their customers. Anyone found doing any of these things could receive a fine and even criminal charges. HMRC also argued that current legislation makes it too easy for companies to blame lower members on staff for fraud. They believe that their new consultation places responsibility on the owners of a company.
As a result of extra funding given to it in the Summer 2015 budget, HMRC said it now hopes to investigate 100 companies and wealthy individuals each year by 2020. Hopefully the PAC, and the public, will see these changes implemented by the end of this year.