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Treasury Says Criticism of U.K. Tax Collection ‘Scaremongering’

U.K. Treasury Minister David Gauke will hit back at allegations that the government is failing to collect billions of pounds of tax it is owed, saying some reports amount to scaremongering.

Unions including the Public and Commercial Services Union say the tax gap, the amount of revenue lost to tax avoidance and evasion, is as much as 120 billion pounds ($190 billion) and blame the slippage on job cuts at Her Majesty’s Revenue and Customs.

The government provoked public anger last year when it excused Goldman Sachs Group Inc. from paying as much as 10 million pounds in interest payments on unpaid tax. In December, the Public Accounts Committee of the House of Commons urged the tax agency to recover as much as 25 billion pounds from unresolved disputes.

“It’s unsurprising and indeed I think it is right that at a time when we have to account for every penny spent, and collect every penny owed, that government and HMRC come under ever closer scrutiny,” Gauke will say in a speech today, according to extracts released by his office in London. “But it’s one thing to scrutinize, it’s quite another to scaremonger.”

Taxpayer confidentiality rules have prevented the tax authority from defending itself over some settlements, fueling a tax debate that “has become distorted and detached from reality,” Gauke will say.

Gauke describes reports of a 120 billion-pound tax gap -- more than three times official estimates -- as “based on far-fetched assumptions.” He also dismisses claims that the gap attributable to large businesses is as much as 25 billion pounds, saying the figure represents neither tax owed nor unpaid tax.

‘Damaging, Irresponsible’

“Of course these are complex issues, but the misrepresentation and inaccuracy that so often distorts reporting on tax affairs is damaging and irresponsible,” he will say. “It merely belittles the good work that HMRC does.”

Chancellor of the Exchequer George Osborne is under pressure to close down tax loopholes used by the wealthy at a time when he is cutting spending and raising taxes to narrow the budget deficit.

The Treasury announced yesterday it had acted to stop the use of two “aggressive” tax-avoidance schemes disclosed by a bank, ensuring the payment of more than 500 million pounds in tax.

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