“Two-tier” tax system is squeezing SMEs, say MPs

Ordinary taxpayers believe that a “two-tier” tax system is squeezing small and medium-sized enterprises (SMEs) while large companies and high net worth individuals (HNWIs) are getting away with not paying up, according to MPs.

The comments follow a report from the National Audit Office (NAO) published in November, which suggested that a specialist HM Revenue & Customs (HMRC) HNWI unit was chasing approximately £2billion in potentially unpaid taxes thought to be owed by some of Britain’s wealthiest people.

According to the spending watchdog’s report, more than £1bn of this alleged unpaid tax was believed to be linked to tax avoidance schemes.

Conservative MP Charlie Elphicke among others have criticised the Revenue for ‘going after the minnows while big fish swim away’, according to reports.

Mr Elphicke has said: “The number of high net worth taxpayers has risen from 5,900 to about 6,500, so there’s more rich people and yet over the time the tax take seems to have fallen by £1 billion.

“My constituents would say to me that it doesn’t look like this unit has been very successful. What do I say to them?”

In response to Mr Elphicke’s comments, HMRC chief executive Jon Thompson said: “Well, the answer to that is that if it wasn’t for spending £14.5 million on this unit you would not have received £416 million worth of compliance yield last year. That’s the answer to that”.

HMRC insists that it is taking a tougher stance on compliance into 2017.