Tax evasion merits more focus, says CIOT

15 June 2018

The Chartered Institute of Taxation (CIOT) has argued in written evidence to the Treasury Sub-Committee’s Tax Avoidance and Tax Evasion Inquiry that HMRC should direct more resources to tackle illegal tax evasion activity given its persistence in Tax Gap figures, rather than simply pile on legislative changes.

While tax avoidance has reduced considerably over the last few years, tax evasion due to illegal activity remains broadly constant. Cracking down hard on tax evasion, whether onshore or offshore, should not mean a harsher penalty regime for those who are careless, still less those who are merely confused: different taxpayer behaviours should prompt different HMRC responses, says the CIOT.

By contrast, it does not matter whether ‘non-compliance‘ has some cross-border element that makes it ‘offshore’: offshore or onshore, it is the fact of non-compliance and the type of taxpayer behaviour that prompts it which are important.

Commenting, John Cullinane, tax policy director, said:

“The UK has a relatively low ‘tax gap’ by international standards, but it is important that HMRC continue to focus on this area, to secure the tax base and promote better public confidence in the tax system. Such efforts must be geared to whether the taxpayer’s behaviour is deliberate, careless, or merely confused.”


In its submission to the committee, the CIOT said:

“When implementing new policies to address non-compliance, it is important to differentiate between the different behaviours that caused the non-compliance; in particular, non-compliance could have nothing to do with avoidance or evasion, but simply be due to error or ignorance. This sort of ‘creep’ has started in some recent legislative measures and proposals, applying comparable time limits and sanctions (penalties) for both deliberate and non-deliberate errors. In our view, this is inappropriate, and sets a dangerous precedent for future measures.”


For further details, read the full press release from the CIOT.