George Bull, senior tax partner at RSM, said: “There are lessons to be learned from what the UK’s public services can deliver when they are properly resourced.
“We have previously reported that tax lost through criminal attacks, tax evasion and the hidden economy has averaged around £14bn per year since 2010.
“To put it another way, if HM Revenue and Customers was adequately resourced to stamp out tax crime, much of the nation’s fiscal pain of recovery from the coronavirus could be eliminated by collecting these taxes on time.”
Mr Bull added that when the situation demanded it, the UK had a “great capacity” to respond to crises and that when resources were needed, they could be found, pointing to the government’s furlough scheme as a “remarkable example” of fundamental policy development and implementation in a short timescale.
Public borrowing is now predicted to total £273bn for 2020-21 or 14 per cent of GDP. According to the OBR, this would be the largest single-year deficit since the second world war.
It is therefore likely the UK will enter a period of limited public spending and increased taxes once the pandemic subsides, in bid to balance the country’s books.
Mr Bull said: “We are not knocking HMRC which is proud of its success in bringing down the levels of legal tax avoidance to historic lows.
“As the UK government plans our route out of lockdown, we urge it to increase the resources available to HMRC so that they can tackle tax crime by the relatively few for the benefit of society.
“Surely, it’s wrong to extract more tax from honest taxpayers while HMRC does not have the resources to tackle such horrifying levels of dishonesty?”
Mr Bull has previously argued a fundamental reform of the tax system to ensure taxes were supportive of growth, straightforward and manageable by the taxman was also required to help boost the country’s recovery from the coronavirus crisis.
Areas identified for reform included National Insurance contributions and the taxation of workplace income alongside a rethink of the taxation of wealth and capital.
Joanna Leyden, director and IFA at Monument Financial, said while a focus on the reduction of tax crime would help, any effort in this area would only have a “significant impact” if coupled with improvements in the efficiency of the country’s public services.
She said: “I’m not convinced that higher taxes are a viable long term solution. SMEs and the self-employed have been very hard hit by the lockdown measures and they will need the opportunity to recover if we are to avoid longer term mass unemployment.”
Ricky Chan, director at IFS Wealth and Pensions, agreed, saying clamping down on tax crimes to cover fiscal losses from Covid-19 was "akin to a fairy tale ending".
He added: "I’m not convinced that this would be sufficient to offset costs in full although that’s certainly one avenue. It’s likely the government would raise taxes to “pay for” the costs. The chancellor already implied self-employed taxes could be increased, but other areas rumoured could increasing capital gains tax."
HMRC has been approached for comment.
imogen.tew@ft.com
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