There may be some £10.2bn at risk of being lost to the Treasury unless HMRC manages to successfully investigate its backlog of 41,000 cases of avoidance by private individuals and companies.

The stark figure was revealed by the National Audit Office (NAO) today in its report, Tax Avoidance: tackling marketed avoidance schemes by the National Audit Office, which looked at the effectiveness of the scheme that the government introduced in 2004.

The NAO revealed that more than 100 schemes had been disclosed each year over the last four years under DOTAS but found no evidence that the scheme had discouraged aggressive promoters.

The five largest types of mass marketed schemes included the partnership loss scheme, potentially involving £3.5bn in avoided tax and used by 14,000; the employee benefit trust scheme, involving £1.7bn and used by 3,400; interest relief schemes, risking £1.1bn lost to Treasury coffers with 900 users; employment intermediary schemes involving £600m in avoided tax with 16,000 users and stamp duty land tax schemes involving £500m with 6,600 users.

HMRC estimated that tax at risk from avoidance increased between March 2011 and March 2012, from £9bn to £10.2bn, with SMEs potentially going up from £1.8bn last year to £2.9bn this year while individuals and other avoiders went from £7.2bn last year to £7.3bn this year.

HMRC was also criticised for failing to monitor the costs of its work to tackle avoidance, as its approach is to identify and respond to all the risks it identifies to the effective collection of tax.

'Investigations into suspected non-compliance may or may not reveal that avoidance has taken place, or may uncover evidence of illegal tax evasion rather than avoidance. HMRC does not collect management information on the resources it commits to tackling avoidance... This limits its ability to make informed decisions about how it should best allocate resources to maximise impact,' the report said.

In addition, the NAO has said that HMRC has been unable to enforce compliance with DOTAS on promoters determined to avoid disclosure as some promoters go to some lengths to avoid disclosing a scheme if they perceive an advantage in doing so.

'Where a promoter has obtained a legal opinion that a scheme does not require disclosure, it can claim this represents 'reasonable excuse' and no penalty is applicable. Since September 2007, HMRC has opened 365 enquiries where it suspected a promoter had not complied with the disclosure rules, in most cases concluding that there had been no failure to comply. It has applied 11 penalties over that time, each of £5,000,' the NAO said.

The report does however recognise that DOTAS has helped HMRC to change tax law and prevent some types of avoidance activity, evidenced by 93 changes to tax law designed to reduce avoidance.

The NAO said that DOTAS had also helped to change the market of tax avoidance schemes, with the result that the larger accountancy firms are now less active in this area.

NAO head Amyas Morse has urged HMRC to 'push harder to find an effective way' to tackle the promoters and users of the most aggressive tax avoidance schemes.

'It is inherently difficult to stop tax avoidance as it is not illegal. But HMRC needs to demonstrate how it is going to reduce the 41,000 avoidance cases it currently has open,' Morse said.

Harwood Hutton's Cormac Marum, a member of the UK200Group, said the NAO's report recognised that tax avoidance is not illegal.

'The only thing undermining the UK tax regime is this constant attack on people applying the law... If politicians don't like the law they have created, they need to do their job and introduce fresh rules,' said Marum.

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