In 2011-12, HMRC answered 74% of calls from the public, but by the start of 2015, it only answered 50% of them, the MPs said. Since 2010 there have been just 11 prosecutions for offshore tax evasion.
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The level of customer service provided by the tax office is now so unacceptably poor that it could be considered a “genuine threat to tax collection”, the Public Accounts Committee (PAC) found.
In 2014-15, HMRC had answered 73% of calls to its contact centres.
The PAC has laid into HMRC regardless, with chair Megan Hillier saying it must “rapidly improve its customer service, previously described by the PAC as abysmal and now even worse”.
“We explained to the committee that we hadn’t provided a consistent level of customer service in the first half of the year and we had recruited around 3,000 new staff to improve service levels”.
“We are deeply disappointed at the low number of prosecutions by HMRC for tax evasion”, she said, adding that HMRC must send a clear message to those who seek to evade tax that the penalties will be severe and public.
HMRC claimed it was an “illegal tax avoidance scheme” and that Rangers owed them tens of millions of pounds in unpaid tax, fines and interest.
In a report examining HMRC’s performance in 2014/15, the PAC described the department’s prosecutions for offshore tax evasion as “woefully inadequate”, its customer service as “abysmal” and its reporting as opaque, convoluted and misleading.
“We are concerned that [HMRC] has made little or no progress on a number of important issues that this Committee has raised before”, the committee’s report said.
HMRC’s failure in this area is illustrated by the description of their handling of the leaks by Hervé Falciani which claimed to give details of HSBC account holders engaged in immoral tax practices.
The committee also called on HMRC to publish more detailed information about the forest of tax reliefs – from the marriage allowance to the research and development tax credit – and how much they cost the government in forgone revenue. If the law were otherwise, an employee could readily avoid tax by redirecting income to members of his family to meet outgoings that he would normally pay: for example to a trust for his wife…or to trustees to pay for his children’s education or the outgoings on the family home.
“In addition, HMRC’s approach of counting revenue it expects to collect in future years in this year’s compliance figures is questionable and may well mislead people into believing that HMRC has recovered more tax than it really has”.
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“We brought in more than £1 billion from the first year of applying accelerated payments to avoidance cases and have closed many loopholes and secured tough new enforcement powers”. The department needs major investment backed by real political commitment to tackle evasion and avoidance as an alternative to more damaging spending cuts’.
