HMRC has boosted returns from its investment into tax investigations carried out by local compliance teams, which focus on individual taxpayers and small businesses (a new report from The 2020 Group has found). For every £1 spent by local compliance teams in 2013/14, £18 was collected in additional tax. This is up from £16 per £1 invested during the previous year.
In total, £8.9 billion in extra tax was collected via local compliance investigations in 2013/14, up from £7.8 billion in 2012/13.
This high return on investment means that HMRC is likely to continue to pour resources into tax investigations undertaken by these teams. A growing number of ‘everyday’ taxpayers, including more SMEs, are likely to find themselves under scrutiny as a result.
This increased efficiency serves as a reminder that HMRC is broadening its range of targets. HMRC is no longer focusing solely on high net worth individuals with money held offshore or traditional cash businesses. The attempt to increase revenue has led to a greater focus on ordinary taxpayers.
HMRC has launched a range of campaigns in recent years targeting everyday taxpayers. The ‘Second Incomes Campaign’, for instance, means that private tutors and even online traders are amongst those under more intense scrutiny. Voluntary disclosure schemes have also been launched to target specific job sectors, with solicitors being one of the most recent targets.
The 31st January filing deadline typically triggers a wave of new tax investigations. HMRC’s increased efficiency means that taxpayers should be ever more diligent when completing self-assessment tax returns.
The new aggressive approach adopted by HMRC means it is much more likely that tax-payers may end up on the receiving end of a tax investigation.
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