The exchequer loses at least £5bn a year because the taxman is failing to crack down on \”morally wrong\” tax avoidance schemes similar to the one used by comedian Jimmy Carr, the chair of the Commons public accounts committee warns today.
Margaret Hodge, the former Labour minister, said rich businessmen designing the schemes were \”running rings\” around HMRC.
She said HMRC had an \”appallingly bad record\” at catching tax cheats, having fined just 11 people for promoting tax avoidance since 2004 – despite 10,000 people a year coming forward to report tax avoidance schemes.
A report by the PAC published on Tuesday says there is \”a lot of money to be made in selling avoidance schemes\”, and commissions paid to the creators of the schemes can be up to 20% of the tax saved.
Hodge told Lin Homer, chief executive and permanent secretary of HMRC, that she didn\’t want to be \”aggressive and awful about it\”, but the agency\’s failure to crack down on tax avoidance was \”gobsmacking\”.
\”There has been huge growth, and appalling proliferation [in tax avoidance], and what has HMRC been up to? It has only taken 11 cases to tax tribunals,\” she said.
The 11 tax avoidance promoters taken to tribunal were fined just £5,000 each despite the maximum penalty being £1m. Hodge said HMRC had never fined an individual for failing to disclose a scheme on their tax return.
Hodge said HMRC must \”robustly\” crack down on tax avoidance promoters that are \”costing the country billions, as the public are struggling with less money in their pockets\”. She added: \”It offends the sense of fairness.\”
She called on tax avoiders and the businesses creating tax avoidance schemes to be \”named and shamed\”.
The trust which protects your stake in the family company, Stemcor, so that your children and grandchildren will benefit from a reduction in inheritance tax. On that £17 million or so stake.
Have the promoters of that scheme been named and shamed? Should they be so? If not why not? Should the beneficiaries of that trust be named and shamed? If not, why not?
Or are we in that very interesting alternative world? The one where if not a Labour MP obeys the tax law it is immoral but if a Labour MP obeys the tax law it is moral?