Tax

HMRC recovers £4bn in taxes amid increase in investigations

PfP revealed that the £4bn saved by HMRC in the first quarter of 2021 was more than four times that saved in the second quarter of 2020

HMRC’s investigations and compliance work saved £4bn in taxes from being lost in the last quarter, nearly double the £2.2bn the previous year, according PfP.

PfP revealed the increase in the amount of taxes saved will be due in part to the winding down of the furlough scheme and HMRC having more personnel and time available.

It added that as HMRC reallocated a “significant portion” of its staff to manage the furlough scheme in 2020, its ability to conduct compliance work was affected. However, with the furlough scheme winding down, it has been able to again focus on tackling tax evasion at “full capacity”.

Throughout the year HMRC has been “escalating” its campaign to prevent tax from being lost. PfP added that the £4bn saved by HMRC in the first quarter of 2021 was more than four times that saved in the second quarter of 2020, where HMRC prevented just £870m from being lost.

The firm also suggested that the government will be looking to recoup funds to make up for the money spent financing the coronavirus support programmes. This may well mean that HMRC will be “under increasing pressure” to ensure the ‘tax gap’ is as small as possible.

Kevin Igoe, Managing Director at PfP said: “HMRC is showing it is determined not to let tax slip through the net – it will be pushing forward with full force in its tax investigations.

“It is no wonder that HMRC has stopped more tax from being lost now than at the same point last year – they will be under immense pressure to recoup revenue as the government looks to offset the huge sums spent throughout the pandemic, as quickly as possible.”

He added: “With the increased pressure on HMRC it is likely the number of tax investigations will rise. To prepare for a potential investigation businesses and individuals should ensure they have cover in place – to safeguard against the significant impact on finances an investigation may have.”

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