The MP said that HMRC’s estimated £35bn tax gap is only the “tip of the iceberg”.
Her claims came during a committee hearing with HMRC directors Edward Troup and Jim Harra, who warned that revenue from an exchange deal with Switzerland, struck in 2011, will be less than the £3bn expected by the chancellor.
The HMRC directors told the PAC that £782m had been recovered in total since the agreement was signed to exchange information on UK tax avoidance. The difference in calculated revenue, which was put down to secrecy in the Swiss system, is expected to be revised in the Autumn Statement.
In a long session, Hodge said the existence of a £35bn tax gap suggested HMRC was “institutionally incapable”. She argued that if the tax legally avoided by international companies “such as Google, Amazon and Starbucks” were included, the tax gap would be far larger.
The officials said that, in the year to July, HMRC had brought in more than £1bn from eight legal cases against companies avoiding tax, and argued that they could only follow the laws as they stand around tax collection. Hodge urged them to “test the law”.
Hodge has been a controversial and vocal figure in the tax debate, calling for a crackdown on tax advisors, multinationals using sophisticated tax planning, and for civil servants to accept greater responsibility. In an interview with economia earlier this year, she said she had no intention of being “put off by slurs.”