The Public Accounts Committee report today urged HMRC to get tough on large scale on tax evasion or it faces undermining “public confidence in the tax system” which could have a negative impact for wider tax compliance.
“At the moment there is a pervasive acceptance of the status quo by the top officials in HMRC and we have seen little evidence of a desire to be more assertive,” said the MPs.
Committee chair Margaret Hodge the amount paid by international companies was “outrageous” and an “insult” to British businesses that had to “pay their fare share.”
“Corporation tax revenues have fallen at a time when securing proper income from taxes is more vital than ever," the Labour MP added.
The report follows last month's feisty committee hearing into the amount of tax paid by Amazon, Google and Starbucks, amid a groundswell of public and political anger over the amount of tax being paid.
It comes after a weekend when George Osborne promised increase funding to tackle avoidance and evasion. Later today he is expected to announce an extra £77m a year for two years for more staff, and the chancellor said the extra investment would help recover an extra £2bn a year in unpaid tax.
Hodge said there is “little credible information about what is going on” and that HMRC “lacked clarity when trying to explain its approach to enforcing the corporation tax regime.”
Hodge said HMRC should be challenging but its response so far to aggressive tax avoidance by big businesses “has lacked determination and looks way too lenient.”
“We consider that paying an appropriate amount of tax in the country in which profits are made is not only a matter of basic economics. It is also a matter of morality. The UK should be taking the lead in making this point,” she added.
The MPs said that reform will “have to be conducted on a number of fronts, and include “possible legislative change within the UK and efforts to increase international cooperation.”
“The multinationals should be required to report their tax practices transparently. Prosecutions should be mounted where necessary and offenders should be publically named and shamed,” added the statement.
Following intense criticism over the past few months, Starbucks announced on Saturday it is reviewing its tax approach to Britain with a view to paying more.