The Telegraph reports that HMRC faces a Herculean challenge of around 41,000 avoidance cases, relating to mass-marketed schemes used by individuals and small businesses, with no clear strategy on how to tackle the problem.
In the tone of a schoolmaster berating a lazy pupil Amyas Morse, head of the NAO stated:
“HMRC must push harder to find an effective way to tackle the promoters and users of the most aggressive tax avoidance schemes.”I have to confess that a handful of my school reports sometimes expressed similar sentiments about the need to "try harder". Such sentiments are all very well, if the hapless pupil has the interest/will/understanding/resources etc of how/where to try harder.
However, I am of the view (as expressed many times before) that the rise of avoidance schemes is a result of the increasing complexity of the tax system; the responsibility for which rests in the hands of our "respected" members of parliament.
Morse went on to say:
“Though its disclosure regime has helped to change the market, it has had little impact on the persistent use of highly contrived schemes which deprives the public purse of billions.”
Rules requiring disclosure of certain avoidance arrangements have unearthed more than 2,000 avoidance schemes. The DOTAS regime has led to nearly 100 tax law changes, but leaves HMRC on the back foot while new schemes are designed to circumvent the revised law enter the market.
As I noted only a few weeks ago, it is all very well blaming HMRC for everything that is wrong with the tax system in this country. However, whilst there are some aspects that clearly fall under HMRC's remit (eg procedures/administration), as I have stated many times before the buck stops with Parliament:
- It is Parliament that drafts the legalisation that is blamed by the NAO and MPs for "allowing" tax avoidance to occur.
- It is Parliament that drafts the legislation that makes the UK tax system unfeasibly complex and nigh on impossible to understand.
- It is Parliament (dare I mention wee Gordon) that merged IR and Customs, thus bringing about this buggers' muddle that is HMRC.
- It is Parliament that decrees HMRC must cut its resources.
- It is the government that has failed to make a single minister responsible for HMRC.
Therefore, ultimately, who is to blame for the mess that NAO (and PAC) are complaining about?
As ever views, comments and opinions are always welcome.
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