HMRC headquarters in London. Image: Carlos Delgado HMRC headquarters in London. Image: Carlos Delgado

MPs have criticised HM Revenue & Customs (HMRC)' performance on tackling tax fraud, saying it is still not doing enough.

The Treasury and the taxpayer is missing out on an estimated £16 billion a year because of tax evasion, member of the Public Accounts Committee (PAC) estimated. It called on HMRC to commit more resources to investigating dodgy tax affairs and prosecuting more wealthy tax evaders.

While admitting that tackling tax fraud was "difficult", Meg Hillier, Labour MP and chair of the PAC, told the BBC that HMRC "could clearly be doing more".

She said: "We have long felt that there should be more prosecutions because we think that sends a signal to the honest tax payer who is sweating over their tax returns and also a warning shot to those who are thinking about being fraudulent."

HMRC told the Committee that it investigates around 35 people a year over tax evasion, but astonishingly said it did not know how many had been prosecuted. But it added that following an announcement in the 2015 Summer Budget, it will receive greater funding and hopes to investigate 100 companies and wealth individuals a year by 2020.

Pointing out that it collects 93p in every £1 of tax owed in the UK, HMRC said it is one of the most effective tax collectors in the world and the UK's tax gap is one of the smallest in the world.

"We remain relentless and strategic in tracking down the few that try to get out of paying their fair share," a HMRC spokesperson said.