- HMRC losing out on more than $20 billion a year in revenue
- Officials must step up prosecutions to deter evasion
Britain’s decision to prosecute only one of 3,600 potential tax evaders whose Swiss bank-account details were leaked by a former employee of HSBC Holdings Plc, Herve Falciani, gives a signal that rich people can “get away” with dodging taxes, a cross-party panel of lawmakers said.
The U.K. misses out on 16 billion pounds ($23 billion) in tax income each year as a result of tax fraud and the agency responsible for collection, Her Majesty’s Revenue & Customs, is not doing enough to tackle the problem, the House of Commons Public Accounts Committee said in a report published in London Friday.
“The failure to prosecute more than one individual from the Falciani list, HMRC having closed this case and the Financial Conduct Authority no longer taking further action, creates the impression that the rich can get away with tax fraud,” the panel said. The agency “needs to increase the number of investigations and prosecutions, including wealthy tax evaders, and publicize this work to deter others from evading tax and to send out a message that those who try will not get away with it.”
HMRC must set out a clear strategy for tackling tax fraud and improve the way it gathers and analyzes data to assess its progress, the committee said. It should step up prosecutions for offshore tax fraud, especially in the wake of leaks from a Panamanian law firm this month, it said.
“The release of the ‘Panama Papers’ underlines that there are wealthy people and companies who seek to keep their affairs secret,” Meg Hillier, the chairwoman of the committee and a lawmaker for the opposition Labour Party, said in an e-mailed statement. “Where this secrecy involves criminal activity, prosecution must follow -- and the threat of prosecution must serve as an effective deterrent to others.”
The “growing risk” of sales taxes being dodged by online traders must also be assessed and tackled by HMRC, the committee said.