Out-Law News 2 min. read

HMRC task forces collect £540 million in extra tax revenue

HM Revenue & Customs’ (HMRC) specialist ‘task forces’ have collected £540 million in extra tax revenue for the UK authority in the last financial year according to research by Pinsent Masons, the law firm behind Out-Law.

The amount collected by the task forces in 2019/20 was broadly level with that collected in 2018/19, but marks a four-fold increase from just £138.1m in 2014/15. In total, HMRC has collected more than £2 billion in extra revenues in five years.

Tax law expert Andrew Sackey of Pinsent Masons said the use of task forces allowed HMRC to deploy a wide variety of different compliance tools against a specific issue. He said the task forces also sent a strong message to those who were tempted not to comply with tax rules.

HMRC currently has over 200 active task forces focusing on sectors of the market where its intelligence suggests tax evasion and tax avoidance need addressing, including the London legal profession, the restaurant and takeaway industry, market stall traders, the tobacco industry, and the haulage industry. 

Specific task forces include the ‘Football Compliance Project’ which targets professional football players, football clubs and agents. As of January 2020, this task force had collected £332m in extra revenues since being established in 2017, according to Pinsent Masons.

Meanwhile the ‘Panama Papers Taskforce’, set up following the Panama Papers data leak in 2016 which revealed the offshore financial affairs of thousands of individuals and corporates, expects to have collected £7.2 billion in extra revenues by 2021.

“HMRC sees task forces as a key part of its promote, prevent, respond strategy for boosting tax revenues and changing taxpayer behaviour – they continue to prove to be very effective,” Sackey said.

“Task forces are so effective because they are intelligence driven and narrow in focus. They bring together experienced civil and criminal investigators to deliver publicly visible interventions in a specific taxpayer segment where issues are believed to exist. This enables them to deliver a far greater hit rate than many of the broader investigatory undertakings,” Sackey said.

Sackey said additional funding for HMRC’s compliance work announced in the March 2020 Budget showed that clamping down on tax evasion remained a priority for the government.

“The Treasury forecasts HMRC will collect an additional £4bn in extra tax over the next five years and the use of task forces will play a visible role in achieving this,” Sackey said.

The HMRC task forces are able to team up with investigators from the Fraud Investigation Service (FIS) if the behaviours in question are believed to be sufficiently serious to merit criminal sanctions. The FIS has a full range of police powers, including the ability to carry out dawn raids, interview subjects under caution and make arrests.

Although task force activity was suspended during the Covid-19 pandemic, Sackey said it would be likely to resume as the UK emerged from the crisis and HMRC sought to increase tax revenues to cover growing coronavirus-driven public sector expenditure.

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