Under a Labour government, large companies would be required to make their tax returns public in a bid to improve the quality of information available to parliamentary committees. These committees would then have the power to examine any tax information and to decide whether to scrutinise any documents and practices in private or closed meetings.
The Labour’s plan also includes the formation of a supervisory board, which would give the board direction and enhance its public accountability. The supervisory board would consist of stakeholders and should give support to and protect tax whistleblowers.
The report said that HMRC should invest more heavily in resources and staffing, and more competitive "financial rewards" for staff
The review, commissioned by John McDonnell, the shadow chancellor, proposed the creation of a “well resourced” internal investigation and prosecution unit at HMRC and a network of local offices and staff with local knowledge.
It also called for greater transparency and accountability in HMRC’s reports and for the end of fees as a way to challenge tax assessments.
The report said that public pressure is "a vital ingredient" in transforming HMRC and should not be diluted by the introduction of fees to challenge tax assessments.
Moreover, the Department of Justice or a panel of retired judges should guide a rewrite of the general anti abuse rule, rather than by corporate elites, the report concluded.
McDonnell said, “The public want to urgently see more action on tax avoidance but the government have made things worst by cutting staff and resources at HMRC.
“This report lends further support to something we have been arguing for years: that HMRC needs more accountability and resources to deal with tax avoidance and evasion.”
The review was conducted by Prem Sikka, a professor of accounting at the University of Essex, and a team of 14 experts. McDonnell said the Labour Party will look at the report’s recommendations and discuss how to take the review forward to the next stage.
Mark Serwotka, general secretary of the Public and Commercial Services Union, with represents Revenue workers, said McDonnell’s plans to improve accountability and public scrutiny of HMRC were “groundbreaking”.
“Years of cuts and a lack of political will to genuinely tackle corporate abuse of our tax system mean HMRC is currently far from fit for the 21st century,” Serwotka added.
Earlier this week, the Revenue announced a major internal restructure to improve its customer service standards and help ensure a smooth digital transformation, replacing its current four lines of business with three different groups.
The new structure follows repeated criticism of HMRC’s service standards over the last 12 months after call-waiting times increased dramatically last year after a raft of staff cuts.
Last month, the government published its own plan to tackle tax avoidance. The Conservative government proposed sanctions for accountants, lawyers, tax planners and advisers who provide advice on how to avoid tax.
Under plans set out in an HMRC consultation document, those who design, market or facilitate the use of tax avoidance arrangements that are defeated by HMRC could have to pay a fine of up to 100% of the tax the scheme’s user underpaid.