Public Accounts Committee warns HMRC is being 'battered by the winds of Brexit' - with dangerous consequences in the wake of the Paradise Papers.
From flagging NHS recruitment to a burnt-out trade department, Brexit is putting huge pressure on the whole public sector. But some are feeling the squeeze more than others.
More than 14,000 UK addresses were leaked in the recent ‘Paradise Papers’ – with offshore accounts registered for high-profile individuals: from Prince Charles and Apple to Lord Ashcroft and the Queen’s private estate.
It followed fast in the wake of the Panama Papers – another huge cache of leaks on offshoring, which led to dozens of in-depth investigations.
But how many cases of tax dodging are being missed?
A new report from the Commons’ Public Accounts Committee suggests the strain of Brexit is hitting its abilities to clamp down on efforts to avoid tax.
The Committee notes that HMRC is undertaking 15 ‘major transformation programmes’. However:
“With Brexit, it faces additional pressures and is having to consider how to change priorities.”
The report goes on:
“The ‘Paradise Papers’ leak suggests potentially serious and extensive allegations of tax evasion and avoidance….
“We are far from confident that HMRC has sufficient resources to deal with the full scale of the recent allegations.”
But the strongest scorn came from committee chair Meg Hillier MP:
“What was already a precarious high-wire act is now being battered by the winds of Brexit, with potentially catastrophic consequences.
“Action arising from allegations in the so-called Paradise Papers could also significantly increase the authority’s workload.
“HMRC accepts something has to give and it now faces difficult decisions on how best to use its limited resources—decisions that must give full consideration to the needs of all taxpayers.”
Tax justice expert Richard Murphy told Left Foot Forward:
“The ridiculous situation HMRC finds itself in is that the Treasury demands that it operate with a reducing budget, and Brexit will create massive new burdens on it….[That’s] because of significant new tax declarations required on imports and exports as a result of leaving the single market and customs union.
“The resources available to do the basic task of collecting tax and chasing tax abusers will be reduced – potentially drastically…
“The answer is, if course, obvious: a bigger budget must be allocated, and urgently. If that does not happen tax cheats can expect to get away with a lot more abuse over the next few years. The PAC are absolutely right to say so.”
Speaking to this site, a spokesperson for HMRC said:
“Following the Paradise Papers data leak, HMRC continues to look very closely at the information disclosed in the public domain, to see if it reveals anything new that could add to existing leads and investigations.
“Since 2010, HMRC has secured an extra £160 billion by tackling tax avoidance, evasion and non-compliance, including £2.8 billion from customers who tried to hide money abroad to avoid paying what they owe.”
Of course, that money is going to the Treasury – not HMRC.
With potentially thousands more cases of Paradise Paper-linked tax dodging still to be investigated, what will slip in the face of a shrinking budget?
Josiah Mortimer is Editor of Left Foot Forward. Follow him on Twitter.
Read the Public Account’s Committee’s report here.Like this article? Sign up to Left Foot Forward's weekday email for the latest progressive news and comment - and support campaigning journalism by making a donation today.