MPs on the Commons Public Accounts Committee last week warned that HMRC risked falling short of its ambitious targets for raising extra revenue due to staff cuts and inefficient technology project management.
The committee’s latest report on HMRC’s compliance and enforcement programme also criticised the department for appearing to advise senior public sector staff that it was appropriate for them to avoid tax by using a managed service company.
In many other aspects, the PAC report covered similar ground gave to a National Audit Office study on the same subject published in March, but was backed by additional evidences presented at committee hearings in the intervening months.
Although the HMRC made “substantial progress” in increasing tax yield, £1.1bn more could have been collected had HMRC not cut more than 3,000 jobs over the five-year period, the committee said.
In evidence to the committee, Mike Eland, HMRC’s director general enforcement and compliance, defended the tens of thousands of job cuts at HMRC over the past five years.
Eland told the MPs ministers wanted to create a new revenue department that was “much smaller and more efficient” than its two predecessors. But critics including tax campaigner Richard Muprhy have argued that jobs losses have hampered HMRC’s ability to counter tax evasion.
In her evidence to the committee, HMRC’s new chief executive Liz Homer, hailed the £4.32bn of additional revenue generated between 2006 and 2011 from £387m invested as a success, representing an 11.1 times return on the investment.
The big surge in enquiries yielded more than £500m over the past five years, and HMRC has set out ambitious expectations for the taskforces that are now underway. To monitor how these campaigns are proceeding, and the impact they are having on UK businesses and advisers, AccountingWEB has opened a new tax investigations discussion group to collect evidence from community members.