The government has failed to collect an “eye-watering” £42bn in unpaid tax, according to an influential group of MPs.
In a report published on Wednesday, the Commons public accounts committee said HMRC is also not collecting 5% of the tax it is owed each year.
The MPs also accused the government of lacking the “ambition” to tackle fraud.
HMRC is set to only recover a quarter of the estimated £4.5bn lost to fraud and error in its Covid support schemes.
Meg Hillier, the Labour chair of the committee, said the government was missing out on “desperately needed” money.
“The eye-watering £42bn now owed to HMRC in unpaid taxes would have filled a lot of this year’s infamous public spending black hole,” she said.
Rishi Sunak and chancellor Jeremy Hunt have said tax rises and public spending cuts are needed to fill a £50bn hole in the nations finances.
HMRC collected £731.1bn in taxes and duties in 2021-22, the highest on record - but is still owed £42bn.
Christine Jardine said the Lib Dem Cabinet Office spokesperson said ministers needed to “get a grip”.
“This government is losing absolutely staggering amounts of money through its incompetence and inability to collect the tax it’s owed,” she said.
“We need to see serious action to close this tax gap black hole. ”
“Anything less would be a failure for millions of people who are struggling with the cost of living crisis.”