The UK’s compliance yield is down by £9 billion over the 2 years of pandemic and it is likely that many more non-compliant taxpayers will escape paying their fair share of tax say MP’s
The Public Accounts committee report that The disruptions caused by the pandemic and the cost-of-living crisis mean the tax gap is highly uncertain, and levels of non-payment are rising. HMRC says its strategy is to prosecute the most serious forms of evasion and criminal activity, and that it focuses on high-value and high-profile cases rather than large volumes of smaller cases. But it does not expect compliance investigations and prosecutions to return to pre-pandemic levels. The PAC is concerned that without sufficient numbers of prosecutions HMRC cannot demonstrate a credible deterrent effect.
The Committee says this makes it hard to have confidence that HMRC will live up to its claim that no tax will go uncollected as a result of the pandemic, and critically it could undermine the sense of fairness on which the tax system relies.
Dame Meg Hillier MP, Chair of the Public Accounts Committee, said:
“HMRC’s ability and efforts to draw in the tax that is so desperately needed to pay for public services were seriously compromised by the pandemic. That alone is bad enough in the current economic crisis but we need to see more effort from HMRC get this back. It is simply not doing enough to deter and punish cheats, even at very high levels. It also needs to help people who want to do the right thing. We cannot and must not arrive at a situation in the UK where it is easier to cheat the tax system than it is to comply with it.”
