HMRC has failed taxpayers with unacceptable customer service and too few prosecutions for tax evasion, Britain's cross-bench Public Accounts Committee has said. Meg Hillier, the Labour MP and committee chair, said the UK tax collectors record was "worse than abysmal".
While praising HMRC for increasing Britain's tax take despite the Conservative government's cuts to departmental budgets, the PAC said it had major concerns over transparency and poor customer service. It also said the department was not clear enough about tax relief.
"Despite this committee's previous recommendations, HMRC still does not report on how much cash was received as a result of its compliance work or on the scale of aggressive tax avoidance which exploits loopholes in the law," the review read.
"We are particularly disappointed by HMRC's failure in [the customer service] area given that people are more likely to pay the right tax when they find HMRC easy to deal with.
"We also remain extremely concerned that HMRC's work has led to too few prosecutions of individuals for tax evasion and that there is, therefore, no credible punishment to deter people from breaking the law in this manner."
HMRC has hit back at the claims, pointing out that it had achieved record results and collected a record £517bn ($797bn) in tax revenue. It claims major steps have been made towards closing the tax gap in the UK, arguing it is one of the lowest in the world.
The department acknowledged the issue with customer service but said it had taken on more staff to improve standards.
"We explained to the committee that we hadn't provided a consistent level of customer service in the first half of the year and we had recruited around 3,000 new staff to improve service levels," a spokeswoman said. "But these customer service issues did not affect our ability to collect tax."
"Last year, we secured £26bn of additional yield across all our compliance work, ensuring everyone pays what they owe. We brought in more than £1bn from the first year of applying accelerated payments to avoidance cases and have closed many loopholes and secured tough new enforcement powers."