Taxman’s avoidance and evasion crackdown hits record yield

THE TOTAL YIELD from investigations into tax avoidance and evasion hit £21bn in 2011/12, a jump of approximately a third.

By comparison, tax investigations during 2010/11 brought in £16bn, while in 2004/05 - the first tax year administered by the post-merger HM Revenue & Customs - the figure was £6.9bn, according to research by UHY Hacker Young.

The growth in yield is indicative of HMRC's increasingly aggressive approach to compliance, Hacker Young tax partner Roy Maugham (pictured) said.

He added he fully expects to see the taxman ratchet up its investigations further after the Treasury ordered the organisation to bring in £7bn in extra revenue by 2014/15.

He said: "HMRC's approach to compliance is becoming more hard-line with each passing year, and that is reflected in these figures. This is the approach HMRC must take if it is to meet the very ambitious compliance yield targets set by the chancellor.

"The government has put HMRC under pressure to deliver, and they in turn have put businesses and individuals under pressure."

Taskforces launched by the taxman over the past year have targeted more than 30 groups, including lawyers in London, online traders and the construction industry, which the department hopes will bring in around £150m.

But while that technique, which focusses on specific sectors and geographies, could prove effective, Maugham warned it could have negative repercussions for businesses.

He said: "There is a real danger that these tax inspectors, who swamp a sector, will be forced to keep digging until they find something - anything - to justify the noise HMRC has made about its task forces."

"It used to be that compliant businesses had nothing to worry about, but this is changing as inspectors come under huge pressure to increase yields."