HMRC tax investigations double

The number of individuals being investigated by HMRC has doubled in one year, raising concerns that people are being targeted for honest mistakes.

HM Revenue & Customs made inquiries about the tax affairs of 237,215 people last year, compared with about 119,000 in 2011-12, according to figures obtained by UHY Hacker Young.

The number of self-employed people investigated  quadrupled in that time while annual prosecutions increased sevenfold in three years, the newspaper reported.

Mark Giddens, a partner at UHY Hacker Young, told the Daily Telegraph that HMRC was focusing on collecting tax from “soft targets” such as teachers, doctors and lawyers.

“Rather than questioning the bill, these individuals will pay up,” he said. “As we all know, the revenue makes mistakes."

A Tory MP on the Commons Treasury select committee told the Telegraph that HMRC had been “given a mandate to aggressively go about trying to collect tax” and accused it of “nit-picking”.

The issue also aroused the ire of the IR35 community, which has been the focus of several HMRC taskforces in recent years, 

Kate Cottrell, an expert on contractor tax, said she had seen an "extraordinarily large" increase in IR35 tax investigations. 

Comments

raising concerns that people are being targeted for honest mista

The Black Knight | | Permalink

"raising concerns that people are being targeted for honest mistakes."

Why is that?

I will agree that HMRC are still picking the wrong cases that result in a lot of work for no income on the basis that it's an easy weeks work for an inspector. But I don't think honest mistakes are being targeted. However if they are found then they need correction, but the penalty will be £nil

There is also a lack of ability within HMRC which means that perhaps only silly mistakes can be picked up rather than looking for evasion which even when obvious they would miss.

HMRC could improve their enquiry results 100 fold in my view.

Is the real reason for this line that these are accountants making honest mistakes on their clients behalf?

soft targets

ken of chesterl... | | Permalink

one more reason I'm glad I've retired.

I've acted for teachers and doctors,  none of whom could be called soft targets. But teachers and many doctors are employed rather than self-employed.  Could the implication be that many of the "soft targets" are unrepresented? Or is the issue that they want to get on with their professional / vocational work, and would pay up to avoid the hassle?

 

Follow the money

the_Poacher | | Permalink

Hmrc staff are driven to improve yield every year. The levels of skill and experience are falling so staff have to bring in money where they can. Simple mistakes and errors are quick way and high yielding so they will try to tackle as many of these as they can. Tackling evasion is harder so such cases get a list priority. Who was it said that targets drive behaviour?

Soft targets?

keng.cheong@war... | | Permalink

For the unrepresented, HMRC will be their personal accountants. From my personal experience, they furnish me with a calculation schedule so I can cross check the amounts. If I disagree, I write back. from my professional experience, they have been very understanding with regards to payments by instalments where there has been underpayment of tax.

On the flip side, I have come across situations where the enquiry has resulted in overpayment of tax. So, it works both ways.

mr. mischief's picture

stupid

mr. mischief | | Permalink

The majority of enquiries I get in my client base are unbelievably stupid and the amount of additional revenue generated over the past 5 years totals precisely zero.

On the flip side, the dodgy local firm of Chartered Accountants has enquiries coming out of its ears so perhaps there is some kind of sensible targeting after all!