Revenue to spend £1bn chasing tax-dodgers

We can all expect a lot more scrutiny from the taxman, as HMRC boosts its compliance budget.

Last Updated: 31 Aug 2010

HM Revenue & Customs is to spend nearly £1bn this year on hunting down tax dodgers, as it comes under pressure from its political pay-masters to ramp up the tax take. According to its new business plan, the Revenue wants to squeeze an extra £2.4bn out of nefarious individuals who try and avoid taxes, so it’s allocating 24% of its overall budget to its compliance and enforcement division. That’s a big increase on previous years, and the biggest allocation of any department – showing how serious the Revenue is about cracking down. But will it yield the desired result? We’ll believe it when we see it…

New chief exec Lesley Strathnie told the Times that the Revenue was just allocating its budget ‘on the basis of putting money into areas where they believe they will get the greatest return’, though he agreed that a 24% allocation was proof that compliance (as catching tax cheats is officially known) would be a major focus this year. And with the Government breathing down its neck, as it looks to plug the huge hole it’s created in the public finances, that’s not exactly surprising – particularly since politicians never lost votes by cracking down on rich people and/ or tax havens. This year, HMRC will be ‘relentlessly pursuing those who bend or break the rules,’ Strathnie growled menacingly.

The £1bn figure has certainly got tax experts excited (possibly, the cynic might suggest, because they’re excited about all the juicy fees they’ll earn helping their clients stay one step ahead of the game). One lawyer said it indicated that the Revenue would be taking more people to court (an expensive business), while another suggested it was ‘a staggering’ budget, adding: ‘Taxpayers can expect far more frequent enforcement actions, inquiries and challenges to their tax affairs and far greater scrutiny of their affairs.’ That’ll go down well...
Businesses may not be losing too much sleep over it just yet. The Revenue’s enforcement unit has come under fire from tax campaigners for going too easy on corporate tax avoiders – and it’s certainly true that it seems to have favoured a 'lighter touch' approach, offering various deals and amnesties and avoiding prosecutions. But perhaps that’s just been because of budget constraints – maybe its compliance boss Dave Hartnett is about to get nasty...

Incidentally, you may be wondering what exactly the Revenue spends the rest of its budget on, if only a quarter goes to making sure that people actually pay tax. Well, apparently more than a third of its budget goes on IT, property and HR, another 6% on a ‘departmental transformation programme’, and another £400m on ‘other corporate services’ (not the Eliot Spitzer kind, presumably). So the actual tax collection stuff only accounts for about half of its spending. And people think we need more efficiency in the public sector...

In today's bulletin:

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Revenue to spend £1bn chasing tax-dodgers
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