The Public Accounts Committee (PAC) has said that the way HM Revenue & Customs (HMRC) has measured – and seeks to close – the tax gap remains unclear following the publication of its annual report.
According to the PAC, the report fails to address the impact of HMRC’s compliance work on closing the gap.
It adds that the Revenue should be doing more to demonstrate exactly what effect its work on generating compliance yield is having on ‘fluctuating’ tax gap figures.
The PAC suggests that HMRC should:
- Issue a clear report annually on the impact of compliance work.
- Call for greater transparency on the tax affairs of multinationals and high net worth individuals (HNWIs).
- Provide analysis of tax reliefs and costs to improve insight into areas HMRC has decided not to collect tax.
- Provide greater information to support public debate about issues such as country-by-country reporting.
The PAC’s comments come alongside criticism of the Government’s Making Tax Digital (MTD) project, which the PAC says is an area of “serious concern”.
The PAC has said: “HMRC is staking a great deal on the success of its plans to digitise the tax system, but once again it lacks an adequate plan if demand for its call centres does not reduce as quickly as it hopes”.