HMRC campaigns: Where have they gone?

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Of the 18 tax campaigns run by HMRC over the past 12 years, only three remain as 'live'. Jennifer Adams considers the success rate of these campaigns and investigates whether they have been retained, albeit in another guise.

In 2007, HMRC announced a series of campaigns designed to give taxpayers the opportunity to bring their tax affairs up to date on advantageous terms – no questions asked. Each campaign targeted a specific taxpayer group or type of taxable activity. Fast-forward to 2019 and the campaigns that remain target non-declaration of income from let property, credit card sales or second income. The campaigns were intended to be 'one-offs' but HMRC is obviously of the belief that the property tax campaign, in particular, has more to go and remains in place.

However, just because a campaign is no longer 'live' does not mean that HMRC has stopped collecting under that campaign. Once officially closed, HMRC then follows with more searching compliance activity to include investigations and prosecutions.

Information quoted in an article by Abbey Tax in January 2018 concludes that “between February 2015 and March 2017, HMRC delivered nearly £25m from the ongoing pursuit of doctors and dentists in the aftermath of the tax health plan campaign, even though the disclosure opportunity closed all the way back in June 2010. During the same time frame, nearly £18m was extracted from online traders, even though the e-marketplaces campaign closed in September 2012”.

At the start of the campaign process, HMRC was pleased with their tax 'take' and issued regular updates confirming the amount of tax collected per campaign. That all stopped in 2015, as by then the majority of the campaigns had run their course. Detail as to the success rate of the campaigns subsequent to 2015 are, therefore, hard to find online. A schedule remains on HMRC's website but the figures only go to 31 July 2015.

Ascertaining current figures

Abbey Tax quotes figures released by HMRC confirming that the campaigns had generated £1.2bn by 31 March 2017, of which the let property campaign's share was £135.2m.

Moving on to 2019 and in order to obtain up-to-date data, Saffery Champness had to make a freedom of information request. The request for detail on the property tax campaign came through last week and the detail can be found on their website.

HMRC has always believed that landlords were one of the main sectors that had underpaid or did not declare in the first place. In its original announcement for the campaign in 2013, HMRC estimated that up to 1.5 million landlords had underpaid or will have failed to pay up to £500m in tax between 2009 and 2010. They must have calculated that figure somehow and it can only be via information obtained from other government departments.

In this country, you cannot sell property without the Land Registry being involved. A property is sold, registered at Land Registry and it is easy for HMRC's 'Connect' computer to check names of owners against names of council tax payers or those on the electoral roll.

However, figures obtained by Saffery Champness confirm that “in the five years since the campaign started, only 35,099 people have made voluntary disclosures to HMRC which equated to 2.3% of the individuals originally identified, while of the estimated £500m in underpaid taxes, the campaign so far has recovered approximately 17.1% (£85m) of that amount overall”.

The text does not say whether these were landlords who had approached HMRC truly voluntarily, or were those who had received a “we have reason to believe” letters. Whichever the answer, without the campaign this money might not have been collected. However, it must be said that HMRC appears to have overestimated the underpayment somewhat, and as such the property campaign cannot be said to have been as successful as first hoped.

Figures as to the cost of collection would be interesting to obtain, but it cannot be a coincidence that the property campaign continues as it must be the easiest and most cost-effective to collect being that non-disclosure is easy to trace. The property campaign, therefore, has a long way to go and could remain in place for some time yet. Every year non-compliant landlords will come out of the woodwork when they either come to sell or probate is obtained. The campaign covering second income is wide enough to cover all manner of sins and again is likely to remain.

What now?

HMRC believes that campaigns into specific sectors have had their day but that does not mean that the 'non-penalty' process is no more. HMRC's attention has undeniably been diverted to more lucrative areas of investigation, not least to offshore.

As Saffery Champness notes in their consideration, the 'failure to correct' penalty was not applied on full disclosure of an offshore tax irregularity by 30 September 2018. They also note the importance of 'The Common Reporting Standard' (CRS) being an international measure adopted by many of the leading business countries in 2017, whereby countries automatically exchange tax information about financial accounts held by non-residents. 2018 saw a marked increase in the number of countries joining the scheme.

Taskforces

As part of the broader work to tackle tax evasion and avoidance taskforces were launched a few years after campaigns had started, intending to sit alongside once HMRC could evaluate the success of 'targeting' specific sectors.

Taskforces remain in place focusing on high-risk sectors across the UK and this has enabled HMRC to collect in excess of £156m since 2011 from 70 taskforces. An example of the scope of the taskforces remit was detailed in Andrew Goodall's article of 23 September 2014 HMRC launches VAT taskforces in Midlands.

An example of the success rate was quoted in Richard Hattersley's article on 2 June 2016, where HMRC confirmed that its taskforces had retrieved over £540m since they launched in the spring of 2011. “The taskforces have steadily increased the amount of money brought in each year, with 2015-16 £248m money pot doubling the previous year’s yield.”

But again, these figures and comments are now at least three years out of date, and it would appear that ascertaining detailed success rates or otherwise (apart from generalisation figures) must now be undertaken via Freedom of Information requests. The only way that it was known that HMRC collected £819m in additional tax through payroll investigations in 2016/17 was again via an information request.

Whether campaigns can be said to be a success or not in terms of the amount collected, they were successful in confirming HMRC's belief that the 'tax take' was much less than it would otherwise have been. HMRC must be hoping that the experience gleaned from campaigns will come in useful when Making Tax Digital makes it easier to 'target' non-paying ‘customers’.

About Jennifer Adams

Jennifer Adams

Jennifer Adams is Consulting Editor of AccountingWEB and is a professional business author specialising in corporate governance and taxation. She runs her own accounting and consultancy business with offices based in Surrey and Dorset.

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20th Mar 2019 09:56

They are busy enough with the loan charge at the moment

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20th Mar 2019 10:03

Well brace yourselves. My colleague's brother works at HMRC and tells her they have just trained up a whole load of them to start a campaign on CIS again. Oh joy.

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to monksview
20th Mar 2019 11:20

CIS is a total mess and needs closing down. The purge to re-classify subbies on to PAYE has never stopped. We have 3 Limited Company clients that are owed £243k going back to 2015/16, yet they still chase CT even though we have asked for offset. It's absolute chaos. The self-employed side doesn't seem so bad though.

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to johnjenkins
20th Mar 2019 17:00

apply for Gross status for them - you tick a box on the paye programme . Takes 10 seconds and you can charge a good fee for ''relieving the burden''

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20th Mar 2019 11:15

MTD, Brexit and people leaving cos job satisfaction is nil.

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By Ajtms
20th Mar 2019 12:20

I haven't seen any advantageous terms in the Property Income Campaign. I have a situation of a wife declaring 100% of joint letting income rather than 50/50 and HMRC still want a non-postponed 15% penalty +interest on the husband's undeclared half without taking into account the tax the wife has over paid by declaring 100% rather than 50% .

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to Ajtms
20th Mar 2019 14:25

Are they both basic rate or is she basic rate and he is higher rate?

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By Ajtms
to Rammstein1
20th Mar 2019 15:05

Thanks for your response. Husband is higher rate and wife basic rate. Nevertheless, she paid a few thousand pounds too much and HMRC refused to send this to husband's UTR account with same day value and instead insisted on adding 0.5% repayment supplement and charge husband the normal 3.25% thus HMRC make 2.75% from money they already held.

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to Ajtms
20th Mar 2019 15:19

Wife could sign a letter to transfer excess tax from her account to his and that could help with the interest.

The penalties are a different matter and the let property campaign almost always results in penalties. I did have one case where there were no penalties and had to jump through lots of hoops and queries from HMRC for them to agree with me.

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By Ajtms
to Rammstein1
20th Mar 2019 16:13

Thanks again for your response.
Wife did sign a letter like that asking for surplus taxes to be transferred to husband's UTR account at the value at the date she paid the tax and asked that repayment supplement should not be paid, but instead they insisted on paying the repayment supplement before transferring the balance to husband's UTR account. I am still at a loss as to why HMRC will not suspend the 15% penalty as their compliance manuals say they will.

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to Ajtms
20th Mar 2019 17:02

because they are like children who wont tidy their bedroom... you have to ask 3 times

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20th Mar 2019 12:48

The tax take figures from campaigns need to be broken down to understand what is actual money in the bank including penalties and interest collected, and what is "future revenue protected". The latter is a multiple of the additional tax identified, based on an assumption about the extent to which the circumstances in which the additional tax identified may recur. FRP could be as much as 5 times the original additional tax identified.

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25th Mar 2019 20:14

Hope the CIS campaign will help clear the mess from the CIS company repayments. Claim from Payroll the staffs don't have a clue. Claim from CT and never repaid.

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to BRIGHTAMEDODAH
26th Mar 2019 08:43

We have no need to worry any more. Parliament is taking over everything. So let's get our indicative amendments in.

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