Champagne corks are popping over at HMRC after their best ever year netted them a massive £23.9 billion in taxation revenues, thanks to their aggressive new approach to investigations.
The figure of £23.9 billion (a combination of collections from regular taxpayers, people trying to avoid tax, and people paying too little) represents a significant rise of more than £3.2 billion from the previous year as well as an impressive rise of £9 billion over the total that was collected 3 years before. What’s more it even surpasses (by £1 billion) the self-set target of the Treasury in Autumn of 2013. At that time they government announced in their autumn statement that it would be unveiling the biggest ever package of measures designed to tackle head-on error, fraud, tax avoidance and tax evasion.
And since that announcement they have been busy. The taxman has been on a winning streak in court with 30 wins over tax avoiders which has saved them a massive £2.7 billion in revenue. When totaled up to include the 94 court victories over tax avoiders between April 2010 and March of 2014, HMRC’s success rate is now up to a not-to-be-sniffed at 80%.
Similarly there has been a strict crackdown on avoidance measures that has targeted and affected SME’s and contractors. That crackdown has seen a reduction by 75% on newly marketed tax avoidance arrangements and schemes being registered under the Disclosure of Tax Avoidance Schemes (DOTAS). As a result of the crackdown, in 2013/14 there were only 28 schemes registered under DOTAS, compared with 116 throughout the 2009/10 tax year.
Another area to prove fruitful has been the introduction of new measures to catch out disguised remuneration. According to the Treasury £3.8 billion has been protected in the period from 2011/12 to 2015/16 thanks to these measures. Additionally they projected that the General Anti-Abuse Rules brought in in 2013 will be netting them another £235 million of revenue between the period of 2014/15 and 2017/18.
Of revenues already in their pocket, HMRC noted that they had netted more than £854 million from many high net worth individuals and that they had taken over £1 billion in revenues from criminals. There was a respectable (but still not enough) £31 billion from large companies and corporations too. And many of these came as a result of the 2650 prosecutions that they had brought since 2010. Over the last year alone HMRC took a record number – 915 – of cases to court with the actual number of convictions achieved totaling around 700, another record. David Gauke, a Treasury Minister reflected on these figures that they had come as a result of ‘ambitious targets’ and that they:
“demonstrate that HMRC is successfully meeting these challenges. It also sends a clear signal – HMRC will pursue those seeking to avoid their responsibilities and will collect the taxes that are due.”
Supporting HMRC by legislation the government had made 42 different changes to the taxation laws since March 2010, all intended to seal any loopholes and prevent and deter tax avoidance.
HMRC did briefly acknowledge that small businesses were not always trying to pull a fast one:
“non payment of tax is not a deliberate choice, it’s a short-term cashflow problem … We actively support SMEs in these circumstances with Time To Pay arrangements. More than 90 per cent of debt in Time To Pay arrangements is recovered. A harder line could push small businesses and individuals into insolvency, which could lead to less debt being recovered.”
But most taxation experts agree that HMRC is taking no prisoners, as evidenced by the winding down of the aforementioned Time to Pay, which is now not supporting firms who use dividends, is harder to get approved on if you have used it before and which no longer makes its agreements public.