The Inland Revenue has come under fire from an influential committee of MPs for failing to recover billions of pounds lost to tax fraud.

In its report, the Commons public accounts committee argued that those people who considered committing fraud believe the chances of getting caught are minimal.

Only 400 investigations of serious fraud and 60 prosecutions are made each year. "The low number of fraud investigations and prosecutions is not commensurate with the potential sums at stake in lost revenue," said the report.