HMRC yield from personal tax investigations reaches record high of £845 million

Publications that covered this story include The Daily Telegraph and Financial Times, 15 November 2014.
  • 39% increase in just a year

HMRC’s yield from personal tax investigations has reached a record high in the past year, as the organisation further clamps down on tax evasion, according to our research.

In the last year alone, the amount of additional tax collected by HMRC from investigations into self-assessed individual taxpayers increased to £845 million in 2013/14*, up 39% from £609million in 2012/13, and almost four times the total in 2007/08 (see graph).

We explain that HMRC is increasingly tightening the noose on tax evaders with new campaigns targeting a broader spectrum of tax payers.

For example, HMRC’s ‘Let Property Campaign’, is aimed at collecting unpaid tax from residential landlords, who may not have reported their extra rental income. HMRC states that there are fewer than 500,000 landlords currently registered on their databases, but estimates as many as 1.5 million people own second properties in the UK.

In April of this year, HMRC asked letting agents for the names of every landlord on their books and figures for rent collected for the prior tax year. This information will be used to identify targets. Owners of holiday homes abroad are also on the organisation’s radar, with HMRC increasingly using information available online to track down those it suspects of failing to pay tax on their rental income.

HMRC has also launched a ‘Second Incomes Campaign’ targeting individuals who have not declared additional untaxed income, such as eBay sellers and private tutors.

Mark Giddens, Head of Private Client Services says: “HMRC has become more thorough and more ruthless as it looks to maximise tax take without increasing its costs. That’s bringing more and more ‘average’ taxpayers into its sights.”

“HMRC has been in pursuit of landlords for some time. This year, however, HMRC has ramped up its campaign, utilising every tool at its disposal to hunt down undisclosed income from rental properties.”

“Small business owners and people with small second incomes – those who may think of themselves as being ‘under the radar’ – need to make sure their tax affairs are completely compliant, as HMRC is now very unforgiving, even when it comes to simple errors.”

We add that HMRC has also set up a series of task forces across the UK to concentrate its focus on a more regional basis. Those set up this year include a taskforce launched in the South and South East aimed at identifying those obviously living beyond their reported means, and a taskforce aimed at uncovering property tax evasion in South-west England and South Wales.

Mark says: “Task forces across the UK are allowing HMRC to keep a closer eye on taxpayers at a local level, and investigate specific sectors where it believes tax evasion is a problem.”

We state that groups previously targeted by HMRC task forces include medical professionals, plumbers and electricians, with additional tax yield from those three task forces alone reaching £100 million.

Almost fourfold rise in HMRC yield from personal tax investigations since 2007

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*Year end March 31 2014