We must stop tax avoidance scheme enablers from getting away scot-free , says Dame Margaret Hodge

Dame Margaret, who is chair of the All-Party Parliamentary Group for Anti-Corruption & Responsible Tax (APPG), highlighted how individuals who wrongfully claim benefits can be put through a criminal prosecution, but the same principle does not seem to apply to the enablers of tax avoidance schemes, who also cheat the public purse.

She told The Yorkshire Post: "The enablers of these schemes are not punished for cheating the system. We think the problem lies in the fact that HMRC's job is to maximise the amount of tax revenue it can get in, rather than prosecuting the accountants and lawyers who dream up these avoidance schemes.

"When I was chairman of the Public Accounts committee, accountants who appeared before us would claim there was a difference between stuff being unlawful and illegal. I can't for the life of me see the difference."

She said that, through a new Economic Crime bill, MPs were trying to introduce a criminal offence of failing to prevent economic crime.

"It will stop the enablers from getting away scot-free,’’ she said. “An analogy used by me and Kevin Hollinrake (a minister in the Department for Business Energy and Industrial Strategy) relates to construction sites where many people used to die, until we introduced health and safety legislation and site managers were threatened with jail time if they didn’t comply with safety requirements. Deaths on building sites were then cut by 90 per cent.

"Introducing an offence of failing to prevent economic crime could be a very powerful preventative tool.”

Dame Margaret said action was vital during the cost of living crisis. The APPG and TaxWatch have published a joint report which argues that supposedly ‘legal’ tax avoidance could actually be prosecuted as tax fraud.

She added: “If we do nothing, we will either make poorer people pay more tax or we will stop funding public services, such as free school meals. The problem with professional bodies (for accountants and other professional tax advisers) is that they always face two ways."

"They act as a support network for their members and are supposed to regulate them too. We need a complete overhaul of regulations.

"The US takes a tougher line on economic crime because they see it as a security issue. The US has also increased funding for enforcement agencies..The APPG as a group has growing credibilty. We're not about purely partisan politics and we believe the Government is willing to listen to us."

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.”