Following the March 2012 Budget, the Chancellor stepped up the pressure on HM Revenue & Customs to crack down on tax evasion by big businesses and fat cats, in a letter to its chief executive, Lin Homer.
The government has set the top tax collector a target of raising £17billion this tax year from catching out tax cheats in a bid to boost its coffers and satisfy growing public anger. This would boost total tax revenues to £457billion this financial year.
In the March Budget, George Osborne branded tax avoidance 'morally repugnant' and announced measures to prevent abuse. Figures released by the Treasury recently showed almost one in ten earning more than £10million a year is paying less than the 20 per cent basic rate of income tax.
In a letter to Homer, the Chancellor said HMRC had been 'highly successful' in increasing tax revenues, pulling in £13.9billion last financial year. But it ordered HMRC to squeeze another £3.1billion from tax evaders and improve its dealings with the 'complex tax affairs of the largest businesses'. Osborne ordered further investment in 'tackling tax avoidance, evasion and criminal attack'.
HMRC is under pressure to raise its game after being accused by MPs of striking 'sweetheart' deals with blue-chip firms while hounding ordinary tax-payers for unpaid tax. But experts warned cut-backs to HMRC could make it more difficult to hit its targets and could even cause its service to deteriorate.
It is under strict orders to slash almost a billion pounds from its budget and improve service after a series of gaffes, including the embarrassing admission in September 2010 that it had been billing 5.7million taxpayers the wrong amount for two years. HMRC has closed tax offices across the country while the number of staff has been cut by more than a third since 2005 to 64,000. Another 3,000 staff will lose their jobs over the coming year.