Could budget squeeze halt tax avoidance crackdown?

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Tax dodgers could be allowed to get off scot-free if predicted cuts to HMRC’s budget are pushed through by ministers.

Civil service union the FDA is warning that the new Conservative government could axe more than a fifth of the Revenue’s workforce as part of its latest cost-cutting drive. It is feared that HMRC and other unprotected departments will suffer the most.

FDA general secretary Dave Penman said the cuts would severely damage the Revenue’s chances of achieving the £5 billion target set by George Osborne. He claimed the taxman would need to keep hold of top-class employees if it had any chance of going after serial avoiders.

Mr Penman said: “HMRC has already delivered the tax avoidance targets it was set in the last Parliament and that’s because it invested in key people on the tax avoidance side. It’s about paying for experienced top tax professionals and they’re not going to get the £5 billion unless they invest more money.

“HMRC staff have absolutely made the case that if you invest in tax professionals you will get a return of 10 or 20 times what you spend. Whether the chancellor remains convinced is what has to be answered.”

FDA estimates that between 10,000 and 15,000 HMRC staff will be axed, a prediction based on data from the Office for Budget Responsibility. OBR claimed that only 40% of the planned Whitehall cuts between 2010 and 2020 have so far taken place.

A Cabinet Office spokesman dismissed the claims, saying: “The minister will set out his priorities for this Parliament in due course. Anything else at this stage, one week into his tenure, is purely speculation. “

Have your say

What do you think? Do you believe further cuts will hinder HMRC’s chances of tackling tax avoidance? What would you do to solve the problem? Join in the discussion on Twitter, or leave a comment below.

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