In a scathing verdict on HMRC, the cross-party committee said the Treasury loses at least £5bn to tax avoidance each year, and urged the Revenue "to get much more robust in its approach.”
The report, Tax Avoidance: tackling marketed avoidance schemes, called for those that both use and those that devise tax avoidance schemes to be publicly "named and shamed."
“Promoters of ‘boutique’ tax avoidance schemes like the one brought to our attention by the case of Jimmy Carr, are running rings around HMRC," said PAC chair Margaret Hodge.
"They create schemes which exploit loopholes in legislation or abuse available tax reliefs such as those intended to encourage investment in British films, and then sign up as many clients as possible, knowing that it will take time for HMRC to change the law and shut the scheme down.
"Their clients can then take advantage of this window of opportunity to make a lot of money at the expense of the taxpayer, while the promoter simply moves on to a new a scheme and repeats the process. It is a game of cat and mouse and HMRC is losing.
“It has allowed a system to evolve where the dice are loaded in favour of the promoters of tax avoidance schemes,” she said.
The Mps report also criticised HMRC for allowing the tax system to become too complex, which gives specialist companies leeway to take advantage of loopholes, and cited a lack of punitive action for those that promote the complex schemes as a major barrier to reducing avoidance.
"The complexity of tax law creates opportunities for avoidance, there are no penalties to stop people promoting these schemes, and HMRC is ineffective in challenging promoters who are deliberately obstructive or deliberately sell schemes they know do not work," said Hodge.
"Promoters pocket their fees whether their schemes work or not.”
UK tax law requires promoters to notify HMRC of new avoidance schemes, which has led to the swift closure of some. However, the report warned that officials do not know how many promoters are ignoring the requirement.
The PAC suggested HMRC "seriously" consider what can be learned from the system used in Australia, which requires advance rulings on whether a scheme works and can result in penalties for promoting those that do not.
The government announced an extra £77m in HMRC funding to tackle evasion and aggressive avoidance in the autumn statement, and both David Cameron and George Osborne have recently used high profile speeches cement their stance against aggressive avoidance by multinationals.
Hodge said, "We are also alarmed to hear that promoters are getting off paying fines for not disclosing their schemes by pleading that, in the opinion of a QC, they have a 'reasonable excuse' for non-disclosure. HMRC is right to explore how to make it more difficult for this tactic to work.
"The number of cases HMRC takes to court is tiny compared to the overall caseload. It must make use of the additional resources it has been given to act much more urgently to investigate and close down new schemes and to bring more cases to court."
A HMRC spokesperson, said, “We are glad the report exposes the practices of promoters who sell tax avoidance schemes to wealthy individuals.
"In the last year alone the courts have ruled in HMRC’s favour in multiple tax avoidance cases where over £1bn has been protected.”
Richard Croker, head of tax at law firm CMS Cameron McKenna said, “Mrs Hodge does not give appropriate credit to what HMRC and the Treasury has already done to change tax behaviour.
“The most obvious aspect of this is of course the GAAR, which will have an effect on the viability of offensive 'avoidance' schemes. She might also consider hat Graham Aaronson and his advisory committee examined the prospects for pre-clearance and concluded that it would over-stretch HMRC resources and was unworkable.”