Over the last year HMRC’s tax investigations teams have yielded strong results, by targeting high net worth and ultra-wealthy individuals, large businesses, SMEs and everyday taxpayers.
Gearing up for this push on investigations, the Revenue created specialist units with the sole purpose of targeting a particular ‘type’ of taxpayer, to gain experience and understanding of those individuals/ entities, to maximise the amount of unpaid tax collected. These teams include those targeting Britain’s richest – individuals worth more than £20 million known as the ‘High Net Worth Unit’, taking on the UK’s largest companies is the ‘Large Business Directorate’, and the ‘Local Compliance’ to tackle everyday tax payers and small to medium sized firms.
Since the formation of these teams, they have been returning significant multiples on the investment; the Large Business Directorate had collected 73X each pound spent by HMRC, the High Net Worth Unit earned 29X, and the Local Compliance team collecting 18X the amount invested by HMRC. These ‘results’ suggest that HMRC will most probably continue investing heavily into these areas, and into investigatory work, causing more disruption and more cost to UK businesses.
In the 2015 Autumn Budget the Government declared that they were continuing to target companies and individuals in order to raise an additional £5 billion per year until 2019/2020 – meaning investigations will continue to rise in order for them to meet their targets.
No matter how well prepared your accounts and records are, HMRC are likely to continue to look to businesses across a range of sectors, of a range of sizes as a means of closing the tax gap by collecting as much unpaid tax as possible. It’s important that you know how to react should HMRC come knocking, and have everything in place to protect yourself and your business.
HMRC may look at personal tax returns, or corporate tax returns, or they may go one step further, using their tax-collecting supercomputer, ‘Connect’ – a database which collects data on taxpayers’ financial affairs, spending habits and expenditure to “judge” whether there may be something awry, whether the information be detailed and correct, or simply vague and unpredictable.
Whilst HMRC may be aiming to ensure that everyone is paying their ‘fair share’, the political pressure has mounted = particularly since the leak of the Panama Papers – encouraging them to collect as much as they can from individuals and companies alike to show their tough stance on tax investigations.
The majority of the media coverage is directed towards large multinational corporations or ultra-high net worth individuals, they aren’t the only ones being investigated and under the scrutiny of HMRC. In our experience, it’s impacting taxpayers of all sizes and sectors.
HMRC are looking to maximise the amount of unpaid tax collected, and are taking a low-tolerance approach to it. There is no hiding from HMRC’s axe wielding investigations team, and no matter how well your affairs are presented, or how legitimate, you may be still be open to scrutiny and attention from HMRC.
In order to make sure you are prepared, and not hit with a hefty bill from your professional advisors, we strongly suggest protecting yourself and your business from the professional costs incurred during an investigation through a tax investigation service. The tax gap is widening, and so will HMRC’s reach.
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This article is for general guidance only. It provides an outline, and may not include points which are important to your situation. You should not depend on this blog without taking advice based on the full facts of your case. The information given was correct at the time of publication.
Disclaimer
The information was correct at time of publishing but may now be out of date.
