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HMRC needs to display more transparency

HMRC needs to display more transparency

A Treasury sub-committee has called on HMRC to be more accountable and transparent when it is settling large tax disputes and devise a more accurate way of calculating the UK tax gap.

There has been widespread criticism from contractor accountants about the way HMRC settles its tax disputes with large organisations. The Revenue has been accused of making “sweetheart” deals with companies like Goldman Sachs and Vodafone.

MP George Mudie, the chairman of the sub-committee, said it was encouraging to note that the Revenue is implementing changes in its tax dispute processes but there are still serious questions about accountability and transparency at board and ministerial level.

He went on to say that HMRC is making inroads into ensuring people pay the taxes they should, but there is still a lot of work to do before we see a significant reduction in the tax gap.

The NAO recently published a report saying that HMRC just missed its target to increase the amount of tax it collected from initiatives to clamp down on tax evasion.

The report from the Treasury sub-committee says that the tax gap calculation is flawed and the Revenue should focus on making sure people pay the correct amount of tax rather than maximising revenue regardless of the cost.

Other recommendations included in the report were for a general tax disclosure facility and prosecution for people who fail to disclose tax through offshore campaigns.

The UK tax gap has been estimated at around £120 billion, of which £25 billion is late paid tax. HMRC suggests that tax evasion accounts for 7% of that, but based on figures from the World Bank, it could be as high as 13%.

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