TT303: Cracking down on compliance pays for HMRC
New figures show HMRC’s “customer compliance” efforts are yielding substantial sums.
In early August, HMRC issued its annual report and accounts for 2018/19. While its 301 pages are not everyone’s choice of holiday reading, it did contain some eye-opening information about the “compliance yield” – how much HMRC raised from its work in countering tax avoidance schemes, tax evasion and plain fraud.
HMRC puts the figure at £34.1bn out of total revenue raised in 2018/19 of £627.9bn. Of that £34.1bn, £13bn was collected as a result of investigations, a 27% increase on investigations from the previous year. The sharp rise was partly due to individuals settling with HMRC ahead of April’s introduction of the controversial Loan Charge, targeting disguised remuneration schemes.
There was probably also a boost from the implementation of the OECD’s Common Reporting Standard, generating automatic exchange of information between national tax authorities. This may have become apparent from the appearance of questions about tax residence in many financial documents or from existing institutions with which you hold investments.
In its accounts, HMRC highlights that it places about 500,000 ‘Wealthy Individuals’ into their own separate ‘customer group’. To join this select group requires an income of over £150,000 or assets above £1 million. Those lucky members are the focus of special teams with “an in-depth understanding of the finances, behaviours and compliance risks of wealthy individuals” and “strong data-led approaches to identify who is not paying the right tax”.
It would be reckless to disregard the direction in which HMRC are choosing to now apply their resources or the overriding political climate that has enabled them to do so. As such the days of contrived avoidance schemes are firmly behind us, however, there remain many legitimate tax planning opportunities.
If you are a client of Barnes Roffe LLP you might also want to consider subscribing to our fee protection insurance, if you have not already done so, as the cost of dealing with a HMRC enquiry can be significant.
Whether you are looking for bespoke tax advice or assistance with a HMRC enquiry Barnes Roffe LLP is able to assist.
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