In last week’s Spring Statement, Rachel Reeves announced the government’s intention to clamp down on tax evasion, including novel ways to help close the ‘tax gap’, with analysis showing unpaid tax liabilities owed to HMRC amounting to more than £44bn at the end of 2024.
Measures to Be Implemented
- Spending £100m on 500 new HMRC compliance office
- £87m to improve HMRC’s debt collection
- Prosecuting 20% more tax fraudsters “Compensation” payments to would-be whistleblowers
Additionally, promoters of tax avoidance schemes will be targeted together with ‘phoenixisation’ of businesses using contrived insolvencies to evade tax and write off of debts, and an increase in penalties for late payment of tax.
Incentivising Whistleblowers
Perhaps the most eye-opening tactic is the incentivisation for the public to inform HMRC on others’ tax-dodging and receiving a percentage of any tax recovered as a result, which is a stance already adopted by the US IRS. An immediate question here is whether this will need to be declared in the whistleblower’s own tax return or will be considered a tax-free payment.
Further Considerations for Cracking Down on Tax Evasion
Further considerations of how to crack down on tax evasion include cancelling of passports or seeking to impose driving bans in the most serious cases of deliberate tax non-compliance.
Time to Take Action
These increased measures mean that even taxpayers who have made simple careless mistakes are more likely to hear from HMRC. Therefore, now is the time to take action and correct things before it’s too late. If you believe you may have failed to properly disclose any income or gain to HMRC, please get in touch with TAP and we can discuss the best way forward for you.
