HMRC has individuals under criminal investigation for offences relating to the loan charge

HMRC said it was continuing to make it harder for promoters to sell tax avoidance schemes and reduce demand.

A spokesman for HMRC made the comments in response to a joint report from the All-Party Parliamentary Group for Anti-Corruption & Responsible Tax and TaxWatch which recommended that HMRC changes its approach to enforcement by using existing criminal law to prosecute the advisers behind the most aggressive tax avoidance schemes.

The new report, which has the title ‘Putting a Stop to the Tax Fraud Game’, called on the Government to close loopholes which allow egregious tax fraud to go unpunished. The report argues that much that is claimed to be "legal" tax avoidance is actually criminal tax fraud.

An HMRC spokesperson said: “HMRC is committed to tackling tax avoidance schemes targeted at individuals and the amount lost through them has fallen by two thirds since 2013/14.

“We continue to make it harder for promoters to sell tax avoidance schemes and to reduce demand, stepping up our efforts to warn individuals about the risks of being drawn in to avoidance, and helping them to get out of a scheme once they realise that they might be caught up in one.”

A spokesman stressed that HMRC was using all the powers at its disposal to tackle those who promote and enable tax avoidance schemes.

The statement added: “That includes our standard tax powers, and specialist powers targeted at those involved in tax avoidance, all the way through to investigation with a view to criminal prosecution where appropriate.”

In 2013/14 HMRC estimates that marketed tax avoidance cost the Exchequer about £1.3 billion. By 2020/21 that figure had fallen to about £0.4 billion, according to HMRC.

The statement added: “We continue to deliver the actions set out in our ‘tackling promoters of mass marketed tax avoidance schemes’ strategy to disrupt the activities and supply chains of promoters.

"As well as our full range of civil sanctions, where an avoidance scheme involves fraud or other criminal offences, we use the full range of criminal powers to tackle those who promote or enable avoidance schemes.

"Since the formation of HMRC’s Fraud Investigation Service in 2016, more than 20 individuals have been convicted for offences relating to arrangements which have been promoted and marketed as tax avoidance. These have resulted in over 100 years of custodial, and nine years of suspended, sentences being ordered.

“We also have individuals under live criminal investigation for offences relating to arrangements promoted and marketed as tax avoidance. These include arrangements we have categorised as relating to disguised remuneration and the loan charge.”

The loan charge, announced by the Government in 2016, was designed to tackle tax avoidance schemes where individuals receive income in the form of loans that are not repaid to avoid income tax.