A Scottish Labour MP has hit out at “corporate fat cats” after a group of MPs warned the cost of tax-dodging is likely to be far higher than the annual £5.5 billion estimated by HMRC.
Brian Leishman urged the UK’s tax authority to “do more to tackle the problem head on”. He added that his own party’s government must “close loopholes in the system”.
It comes after the Commons Public Accounts Committee (PAC) said HMRC has processes which are “far too open to abuse” and is “not sufficiently curious” about the true scale of the problem.
Leishman said: “Tax evasion is a massive issue and HMRC must do more to tackle the problem head on, while the government needs to close loopholes in the system. We can only build a fairer society if everyone pays their fair share.
“These billions of missing pounds are a contributing factor as to why people do not have the public services we need and deserve.
“Meanwhile, the millionaire and billionaire class have seen their wealth explode over the past few years with corporate fat cats enjoying bonuses and tax breaks while the average worker struggles to make ends meet.
“Tory austerity has seen institutions gutted in order to give their corporate friends more space to dodge tax. This cannot go on, we must do better to create a society of equals and improve living standards for the many.”
HMRC estimated that tax-dodging cost the UK £5.5 billion between 2022 and 2023, but acknowledged that this calculation was uncertain.
The Public Affairs Committee chairman Geoffrey Clifton-Brown warned that the “many billions rightfully meant for the public purse could just be the tip of the iceberg.”
In its report, the committee said that loopholes in the current system are making it easy for fraudulent behaviour to go undetected.
VAT registrations processes are “far too open to abuse” and the authority is not exploring options to tighten controls sufficiently, it warned.
HMRC does not routinely check addresses when businesses register for the levy. But it says it has confidence that its “risk-based” assessments, combined with due diligence rules for online marketplaces are “working well”.
“We are concerned that HMRC is not sufficiently curious about the true scale of tax evasion,” the report said.
The authority recognises that transaction–based reporting would give it access to more data. But it has also not carried out any analysis to assess whether this would be good value for money, according to the committee.
Significant gaps remain in controls designed to prevent evasion, the report said. Overseas traders can still falsely register as UK sellers and companies due to the lax checks in both HMRC and Companies House registration processes, the MPs warned.
“This means bad actors beyond the reach of UK authorities can too easily evade paying the VAT they owe and gain an unfair advantage over genuine traders,” the report concluded.
To sign up to the Daily Record Politics newsletter, clickhere