AN 80% INCREASE in additional revenue for HMRC coincides with a crackdown on income tax avoidance.
The Counter Avoidance Directorate (CAD) has collected £886m through investigations into tax avoidance schemes over 2015 to 2016. This is an 80% increase compared to the £494m collected over the past 12 months, said law firm Pinsent Masons.
Paul Noble, tax director at Pinsent Masons, said: “The CAD has significantly boosted tax take this year, and it is likely that HMRC and the Treasury will continue to pour resources into its work. After criticism for the backlog of unresolved cases, HMRC have sought to sharpen their approach.”
The news comes as HMRC have paid informants over £460,000 for intelligence on tax evaders, according to law firm RPC. This risks legitimising data theft and puts financial and professional services firms at a bigger risk. The payments to the informant were decided on a base-by-case basis.
Adam Craggs, tax partner at RPC, said: “The hundreds of thousands of pounds HMRC is paying out every year to informants reflects the pressure they are under from the Exchequer to increase the tax yield.”
Tackling tax avoidance has become a priority over recent years due to high profile cases. Therefore, the government is expected to build on the successes following cases such as the Panama Papers scandal, according to Pinsent Masons. It established the CAD in April 2014, with their work undertaken providing the related figures.
Noble said: “HMRC has been awarded some fairly far-reaching powers such as Accelerated Payment Notices (APNs) which require the payment of sums of money prior to any appeal even being decided. HMRC need to ensure they exercise caution and do not ‘overstep’ the mark.”
RPC says that the professional and financial services sector could particularly be at risk, with some concerned that ex-employees could use it as an opportunity to inform on former employers in exchange for monetary rewards.
Craggs added: “There have been questions raised over whether it is right for HMRC to pay for what could be regarded as stolen data. It may encourage more data theft and create the perception that the UK government is turning a blind eye to theft.”
A range of government proposals in recent months has targeted individuals, and those who enable or assist them. It was announced that further measures such as penalties for accountants, tax planners and advisors would be included in the Finance Bill 2017, as well as for “serial tax avoiders” from which some successes have been publicised.
Noble added: “HMRC wants to demonstrate that no one is out of its reach. It therefore makes sense, that anyone who suspects a scheme in which they are involved should take independent professional advice.”
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