MPs ‘far from confident’ taxman able to probe Paradise Papers findings

Posted On: 
12th January 2018

HMRC is struggling to deal with a growing workload because of Brexit and revelations of large scale tax avoidance, parliament’s spending watchdog has said.

The PAC laid out its concerns over HMRC's workload
Credit: 
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The Public Accounts Committee has said the leaking of the Panama Papers piles further pressure on the body, which is having “to consider how to change priorities” - as 15 major transformation programmes also remain in the works.

However the committee says it is “far from confident” the body can handle the unprecedented leak of 11.5m files which was revealed last year. 

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And the report lays out MPs’ concerns over the impacts on the “ordinary taxpayer” from the squeeze, notably on whether it can tackle benefits fraud and whether it is doing enough to support vulnerable Tax Credits recipients.

They say there is a “lack of incentive” for HMRC to reduce Tax Credits fraud and error in the transition period to Universal Credit.

Among its recommendations, the report says HMRC should obtain the information from the ‘Paradise Papers’ as soon as possible and report back to the Committee by March 2018 to set out its response.

And it says HMRC should set out its strategy for tackling Tax Credits error and fraud, given the additional risks posed by transfer to Universal Credit.

The Committee’s chair Meg Hillier said: “HMRC’s transformation programme would have been less risky had it not attempted to do everything at the same time.

“What was already a precarious high-wire act is now being battered by the winds of Brexit, with potentially catastrophic consequences.

“Action arising from allegations in the so-called Paradise Papers could also significantly increase the authority’s workload.

She added: “These are serious, pressing challenges for HMRC, requiring swift and coordinated action in Government. As a matter of urgency the authority must set out a coherent plan and demonstrate it is fit for the future.”

An HMRC spokesperson said: “Following the Paradise Papers data leak, HMRC continues to look very closely at the information disclosed in the public domain, to see if it reveals anything new that could add to existing leads and investigations. 

“Since 2010, HMRC has secured an extra £160bn by tackling tax avoidance, evasion and non-compliance, including £2.8bn from customers who tried to hide money abroad to avoid paying what they owe.”