Up to £16 billion of unpaid tax has been missed by the Treasury according to a new in depth report. More than half a million companies disappeared last year without paying any tax and in most cases not filing accounting.
Tax Research UK said that regulatory bodies had failed to clamp down on firms that avoided filing accounting whilst the tax authorities allowed companies to vanish without first checking if they owed income tax or national insurance on behalf of employees, or corporation tax on company profits.
Richard Murphy, director of Tax Research, said that staff cuts at HMRC and Companies House had allowed thousands of firms to evade detection and leave behind billions in unpaid tax.
He said: “This report catalogues extraordinary failures in regulation by both Companies House and HMRC. It lays no blame on anyone at those organisations for these failures: it is clear that they do not have the resources they need in terms of staffing to undertake the duties demanded of them by parliament.”
There have been 30,000 job losses within HMRC in recent years with another 15,000 to go by 2014. Companies House meanwhile has announced plans to reduce staff by 25 percent.
The Oxford Centre for Business Taxation recently estimated that up to a million companies have failed to pay tax.