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British lawmakers urge tax authority to get tougher on big business

Wednesday, 18 Dec 2013 | 7:01 PM ET

LONDON, Dec 19 (Reuters) - A panel of British lawmakers has criticised the country's tax authority for being too lenient on big business and urged it to take companies to court to force them to pay more tax.

Corporate tax avoidance has risen to the top of the political agenda after revelations about the cross-border structures used by companies such as Google to reap billions of dollars of sales in Britain but pay little or no tax there.

The government has trumpeted its role in international efforts to tackle these profit-shifting tactics, but Britain's Public Accounts Committee (PAC) said in Thursday's annual report on tax collection performance that Her Majesty's Revenue & Customs (HMRC) remains too corporate-friendly.

While efforts have been made to clamp down on proft-shifting, Britain has drastically reduced corporate tax rates and introduced other reforms requested by big business to make the country a more attractive location for foreign investment.

"It has become easier for companies to avoid tax, while ordinary people continue to pay their share," Margaret Hodge, the Labour Party parliamentarian who chairs the Public Accounts Committee, said in a statement.

"HMRC holds back from using the full range of sanctions at its disposal," Hodge added.

The tax authority said that it "strongly disputes" the conclusions of the report.

"HMRC seeks to collect the tax that is due from all taxpayers, so that everyone pays their fair share in accordance with the tax laws," it said in a statement.

In hearings this year, the all-party Public Accounts Committee has criticised HMRC for not challenging in court the complex corporate tax structures of companies such as Amazon and Google.

"HMRC should be more willing to pursue prosecutions against individuals and large businesses to test the boundaries of the law," Thursday's report said.

Though the PAC is Britain's public finances watchdog, it does not have the power to force HMRC to change its policies.

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