HMRC is not doing enough to tackle tax fraud, according to a report by the Public Accounts Committee (PAC).

Findings show that tax fraud is creating losses of around £16 billion a year, almost half of the £34 billion tax gap.

The level of tax fraud losses has remained constant over the last 5 years – accounting 3% of all tax liabilities.

The PAC has criticised the lack of strategy for dealing with tax fraud, describing the department’s reporting of its own performance as “too confusing“ and unclear.

Meg Hillier MP, chair of the PAC, said:

“The scale of tax fraud, both in cash terms and as a proportion of uncollected tax, demonstrates just how vital it is for HMRC to bring focus to its efforts in this area.

“Honest taxpayers rightly expect a tax system that works fairly for all and any perception that this is not the case undermines the public’s trust in that system. Its credibility is at risk.

“The department must be far clearer with Parliament and the public about its strategy for combating tax fraud and the impact of that strategy on the tax gap. To achieve this it needs a better grasp of its own work.”