Businesses and individuals who avoided tax between 2010 and 11 have cost Britain around £5 billion. News from the report by the National Audit Office has raised doubts about the efficient our HM Revenue and Customs actually is. HMRC has a backlog of 41,000 open tax avoidance cases it's investigating and which are potentially worth a further £10.2bn to the Treasury.
Earlier this month the Public Accounts Committee hauled in representatives from two top companies: Amazon and Google because of newspaper headlines which claimed that both firms were paying almost no corporation tax despite racking up billions of pounds of sales of books, games, CDs and the like. The PAC's job is to make sure the government's getting value for money when it comes to its financial affairs. Matt Brittin from Google said at the time that the company cut tax bill by channelling profits from European sales through Bermuda but said this was perfectly legal.
The tax affairs of Starbucks also came to light through an investigation by the Reuters news agency which reported that the coffee chain paid no corporation, or income, tax in the past three years and that it only paid £8.6 million pounds in total over 13 years during which it recorded sales of £3.1 billion pounds. It apparently reported losses to the tax office even as it told investors its UK operation was profitable.
(back to PAC committee The National Audit Office report says the use of avoidance schemes are a challenge to the HMRC because investigations can take a few years to resolve. For cases 2011-2, the HMRC had an 86% success rate in avoidance cases which went to court.