HMRC

HMRC ‘well placed’ to seek major investment to boost enforcement

HMRC's increasingly strategic use of its most serious criminal and civil investigations powers has increased the amount of tax income its criminal enforcement directorates protected 33-fold in a decade

HMRC is “well placed” to seek a major investment package as the UK emerges from the current crisis, to enable it to boost the amount of tax enforcement work it undertakes and generate funds for the UK’s essential public services, says Pinsent Masons, the multinational law firm.

Andrew Sackey, partner at Pinsent Masons and former Head of HMRC’s Offshore, Corporate and Wealthy compliance unit, has said that as the Treasury “inevitably” looks to increase tax receipts to deal with the deficit, HMRC could put in a bid for more resources to increase its investigation yield as it did after the Global Financial Crisis.

Pinsent Masons added that the 2010 Spending Review and 2015 Summer Budget are two recent examples of HMRC’s enforcement arm succeeding in receiving “very significant investment”.

This allowed it to increase the amount of revenue it prevented from being lost through enforcement activity. Previous requests from HMRC for greater funding for investigations resulted in investments of £900m in 2010 and a further £800m in the 2015 Budget – much of which was used to tackle non-compliance and tax evasion.

It said the HMRC’s increasingly strategic use of its most serious criminal and civil investigations powers has increased the amount of tax income its criminal enforcement directorates protected 33-fold in a decade, from £150m in 2009/10 to £5bn in 2019/20.

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Sackey said: “HMRC has proven on several occasions that its most serious compliance activities provide a good return on investment for the Treasury. That may help it to persuade the Government to give it even more resources and capabilities over the coming years.

“The UK’s level of borrowing is now far higher than after the financial crash. That means that HMRC will eventually come under even greater pressure to increase its tax yield from its criminal and civil investigations to help fill the huge hole in the public purse.”

He added: “The Government has been very generous with the furlough scheme and extension of BBLS lending, but that all needs to be funded. People or corporates who are committing deliberate and wilful tax evasion or aggressive avoidance should expect to be pursued more tenaciously by HMRC’s blended use of criminal and civil powers.”

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