Overworked HMRC won’t snare as many tax dodgers as it had planned

Eyes peeping through a ripped map of the world in an advertising campaign and George Osborne’s warning that the “government is coming after you” promised a clampdown on tax avoiders.

The chancellor had promised “one of the largest ever packages of tax avoidance and evasion measures presented at a budget” in 2013, including information exchange agreements with the Isle of Man, Guernsey and Jersey and an amnesty for tax dodgers over unpaid taxes to bring in £1.05 billion between 2013 and 2018.

The Times report that The Office for Budget Responsibility, the government’s fiscal watchdog, has revised down that forecast by £530 million, having previously lowered the forecast to £800 million in November, figures revealed in its forecasts published alongside the budget last week.

The OBR said this was because the Revenue had informed it that there were “far fewer disclosures than expected” from tax evaders. “They believe this is due to a number of factors, including HMRC campaigns being less effective and with less coverage than expected and a perceived lack of awareness from those targeted.”

HMRC has also informed the OBR that it is “now 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”. The shortfall comes despite HMRC launching advertising campaigns in 2012 and 2014.

A Revenue spokeswoman said that the agency was “getting tougher on offshore evasion . . . any suggestion to the contrary is simply ridiculous”.

John McDonnell, Labour’s shadow chancellor, said that it was “another failure to add to an already long list for the chancellor”. He added: “I have consistently asked for George Osborne to reverse the cuts to HMRC and now we discover as a result that they overworked and underresourced.

“The blame for this lies at George Osborne’s door. After finally bowing to pressure to deal with offshore tax havens, he then made sure his own proposals couldn’t succeed by slashing HMRC staffing at the same time.

“This short-sighted approach to addressing the tax gap means the chancellor is reduced instead to scrabbling around taking money off disabled people to try to meet his fantasy surplus target.”