Publications that covered this story include The Times on 11 February.
- HMRC brings in £438m from investigations into ordinary taxpayers in 2016;
- ‘Dash for cash’ post-Brexit likely to lead to increase in personal tax investigations.
HMRC raked in a total of £438m this year through more aggressive investigations into the filings of ordinary taxpayers.*
These investigations are a result of HMRC intensifying its ‘dash for cash’ as it looks to drive up tax take across the board. HMRC are cracking down further still to identify any inaccuracies in tax returns, even those submitted by ordinary taxpayers.
Ordinary taxpayers with multiple income streams – such as landlords and freelance workers – stand at particular risk of becoming the targets of tax investigation. This is due to the complexity of the UK tax system, especially for those who cannot afford professional advice. These problems are compounded by the difficulty that individuals have in contacting HMRC to discuss their tax affairs.
The growth of the UK’s gig economy could see numbers of these investigations increase in the future, as more ‘self-employed’ workers manage tax affairs single-handedly. Investigations into private individuals by HMRC could now easily be triggered by small errors made due to confusion around fluctuating incomes, for example.
HMRC’s ‘dash for cash’ has triggered investment in technology to fully digitise services, aiming to improve the accuracy and efficiency of tax investigations. This includes technology which allows HMRC to cross-reference tax filings with funds held in bank accounts and other third party sources, enabling errors submitted to be spotted easily.
Roy Maugham, tax partner in our London office, comments: “Ordinary taxpayers need to be aware that HMRC has intensified its scrutiny. It now takes information on their affairs from banks, councils and even social media – if it spots an anomaly, that may lead to a lengthy tax investigation.”
“HMRC are under pressure to up tax yields, and investment in technology has helped them to improve their efficiency and made it easier to catch out accidental underpayments.”
“Although HMRC’s tightening up on self-assessment tax returns affects individuals and businesses across the board, the ordinary taxpayer may be particularly hit as individuals can be more likely to make errors.”
*Self-Assessment Non Business taxpayers