Taxman: We’re too busy to chase offshore cash

Revenue to miss £1bn evasion target by £780m says watchdog

A CLAMPDOWN on tax evaders who have salted cash away offshore will fail to hit its target of more than £1billion because of a lack of resources at the tax office, the Government’s own budget watchdog has admitted.

The Office for Budget Responsibility said the measures to collect tax from dodgers who had funnelled cash into havens such as Jersey, Guernsey and the Isle of Man would raise just £270million rather than the £1.05billion which had been trumpeted – a £780million shortfall.

The alert was buried in the fine details of the OBR’s 260-page report on last week’s Budget. It stated: ‘HM Revenue & Customs is less optimistic about how much of the lost yield can be recouped through additional compliance activity, on the basis that they are unlikely to be able to work the higher number of additional cases on top of existing workloads.’

In 2013 the Government announced an amnesty for tax dodgers using offshore tax havens and at the same time it warned that it would be vigorously pursuing those who did not hold their hands up voluntarily.

The number of tax dodgers coming forward on a voluntary basis was lower than HMRC had expected and last year it claimed that it would recoup the shortfall by hammering those who were trying to evade detection.

Tax barrister and QC Jolyon Maugham told The Mail on Sunday: ‘The wealthy are escaping the consequences of tax evasion because HMRC cannot pursue the cases. The idea of an amnesty is that you front up now and avoid the bad consequences later. This OBR report reveals that the equation is now: front up now but if you don’t there’s not much we can do.’

The admission that HMRC is too stretched to chase tax evaders will fuel criticisms that while the Government has talked tough on tax avoidance and evasion, its austerity programme is in reality hampering tax collection.

Maugham said that in recent months HMRC has been claiming in tax court cases that it should be given special treatment because it does not have the resources to do its job properly. ‘HMRC is pleading austerity in the tax tribunals as a basis for being unable to do the work,’ he said.

The original offshore amnesty was accompanied by an advertising campaign warning of the consequences of not disclosing offshore earnings. Chancellor George Osborne said at the time that if people did not own up to owing tax ‘then we are coming after them’.

HMRC admitted to the OBR that its advertising campaign publicising the amnesty had

flopped, resulting in ‘far fewer disclosures than expected’.

The report from the OBR also reveals that the so-called Google Tax – a levy on company profits that are routed via ‘contrived arrangements’ to tax havens – is set to generate just one-third of the receipts that the Treasury had expected.

The OBR said that because companies were moving onshore to avoid the diverted profits tax, it now expected that about two-thirds of the revenue would be made up through higher corporation tax bills rather than through the diverted profits tax itself.

Several multinationals – including Facebook and Amazon – have moved operations onshore recently.

The Treasury declined to comment.

But a spokesman for HMRC said: ‘We are getting tougher on offshore evasion and using our resources to pursue new and older cases harder than ever. Any suggestion to the contrary is simply ridiculous.’