HMRC claws back £8.5bn from tax evasion investigations

Posted by John Stokdyk PM | on Fri, 17/12/2010 - 12:46 4216

HMRC managed raise £8.5bn from investigating serious tax evasion cases, according to a new report by the National Audit Office.

HMRC’s civil investigations directorate, which examines cases of suspected tax evasion, increased its tax yield by 49% since 2007/08, while at the same time cutting costs by 10% to £567 million.

HMRC investigation facts

HMRC collected £435bn in tax during 2009-10

An estimated £42bn goes uncollected: £15bn due to fraud and evasion; remainder due to error, non-payment and avoidance.

Civil investigation teams generated a yield of £8.5bn in 2009-10 – a 49% increase since 2007-08. Return on enforcement work increased from 9:1 to 15:1.

Average yield for 900 settlements during past three years was £329,000.

Average elapsed time for civil investigations was 25 months, against internal target of 18 months; 15% of investigations took more than three years

Source: Managing civil tax investigations

Although the department had made good progress, the NAO said it should improve its system for referring cases for investigation and also aim to reduce the time it takes to complete investigations.

It also said that more transparency is required around the penalties imposed on those found to evaded or defrauded tax and that it should be made easier to trace whether tax debts from completed investigations have been paid in full.

Commenting on the findings, Amyas Morse, head of the National Audit Office said: “HM Revenue and Customs is taking significant steps towards achieving value for money in its civil investigations of suspected tax fraud or evasion.

“It has further to go, especially in its understanding of the relative costs and returns of its different enforcement activities, including civil investigations, and their wider impact on taxpayer compliance and behaviour. Progress here would inform decisions on how to deploy resources to best effect.”

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