HM Revenue & Customs (HMRC) has struggled to prevent over £4.4 billion in tax evasion due to gaps in its strategy for addressing various tax evasion schemes, according to a report by the National Audit Office (NAO) released Monday.
Strategic Weaknesses in Tackling Tax Evasion
The NAO report criticized HMRC for its inability to adapt its compliance efforts to the evolving landscape of tax evasion. HMRC’s current strategy focuses on specific types of taxes and taxpayer groups but does not adequately address tax evasion schemes that span multiple taxes or involve affiliated taxpayers.
“Tackling tax evasion is not a straightforward task,” said Gareth Davies, head of the NAO. “But real opportunities exist for HMRC to work more systematically across government to reduce it.”
The report also highlighted the growing challenge posed by the rise of online businesses, along with flaws in registration requirements, which have made the U.K. more susceptible to £4B tax evasion.
HMRC £4B Tax Evasion : New Registration Rules
In March 2024, the U.K. government imposed stricter requirements on Companies House to prevent the misuse of the business registration system. This move came after a surge in company registrations before the new rules took effect. A Companies House spokesperson confirmed that it is proactively using its enhanced powers to share intelligence with law enforcement and crack down on fraudulent activity.
