MPs have criticised HMRC for failing to make better use of its business intelligence systems, thereby allowing multinational companies to escape paying corporation tax.
In a report by the House of Common's public accounts committee (PAC), the HMRC is accused of giving lenient treatment to big corporations. This has meant multinationals such as Amazon, Google and Starbucks have avoided paying their fair share of taxes, said the PAC.
"Multinational companies appear to be using transfer pricing, payment of royalties for intellectual property or franchise payments to other group companies to artificially reduce their profits in the UK or to remove them to lower tax jurisdictions," said the PAC report.
"We were not convinced that HMRC has the determination to robustly challenge the practices of these companies."
According to the PAC, HMRC could better its risk profiling of taxpayers by improving its business intelligence systems.
The PAC said the HMRC had delayed implementing a system that would allow it to analyse debts from April 2011 to October 2012.
"HMRC acknowledged that it is not yet making full use of its investment in technology to analyse data," noted the PAC report.
"It is moving from 3,000 individual IT systems to a ‘big 13 systems'. It will only be able to make full use of its data to target compliance activity effectively when that move is complete. It also told us that by then there would be more powerful systems on the market."
HMRC was further criticised by the PAC for failing to reach its targets in reducing tax credits error and fraud.
HMRC recently revealed internal savings of £226m due in part to a massive reduction in the department's IT estate.
03 Dec 2012