Exclusive: HMRC claw back record £4bn in lost taxes
HMRC’s investigations and compliance work saved £4bn in taxes from being lost in the last quarter, nearly double the £2.2bn for the same period last year, according to new data shared with City PM today.
The increase in the amount of taxes saved will be due in part to the winding down of the furlough scheme and HMRC having more personnel and time available, tax insurance investigation firm PfP found.
As HMRC reallocated a significant portion of its staff to manage the furlough scheme in 2020, its ability to conduct compliance work was affected.
However, with the furlough scheme winding down, it has been able to again focus on tackling tax evasion at full capacity.
HMRC stops tax being lost through carrying out tax investigations, recouping money owed and also ensuring that fraudulent repayments are not made, commented Kevin Igoe, Managing Director at PfP.
“HMRC is showing it is determined not to let tax slip through the net – it will be pushing forward with full force in its tax investigations,” Igoe told City PM this afternoon.
Throughout the year HMRC has been escalating its campaign to prevent tax from being lost. The £4bn saved by HMRC in the first quarter of 2021 was more than four times that saved in the second quarter of 2020, where HMRC prevented just £870m from being lost.
Over the past year and a half, the government has spent vast sums of money to stabilise the economy and ensure people have steady income, through the furlough scheme.
The government will be looking to recoup funds to make up for the money spent financing the coronavirus support programmes.
This may well mean that HMRC will be under increasing pressure to ensure the ‘tax gap’ – the difference between the amount of tax that should be collected and the amount of tax that is collected – is as small as possible.
“It is no wonder that HMRC has stopped more tax from being lost now than at the same point last year. They will be under immense pressure to recoup revenue as the government looks to offset the huge sums spent throughout the pandemic, as quick as possible,” Igoe said.
“With the increased pressure on HMRC it is likely number of tax investigations will rise. To prepare for a potential investigation businesses and individuals should ensure they have cover in place – to safeguard against the significant impact on finances an investigation may have, he added.
The firm said taxpayers who are most at risk of being investigated, such as small businesses that has made use of the furlough scheme, would be wise to ensure they have proper coverage in place.