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According to a report released by UHY Hacker Young, HMRC has exceeded its target for the amount of revenue collected during 2012-13. Although the target set was ambitious at £18.7bn, the amount taken was a record high of £20.7bn. One tax partner within the group noted that the huge amounts collected could possibly indicate a higher level of enforcement on investigations by HMRC.

The additional revenues gathered were due to increased compliance work, which was concentrated on tax evasion and avoidance during the year ended 5th April 2013. During the 2011-12 tax year, £18.6bn was collected and also exceeded the target for that year. The extra money came from individuals and small businesses, with 30 per cent more brought in from businesses and 38 per cent more from individuals as a result of tax return investigations conducted by HMRC.

One of the tax partners at the group, Roy Maugham, questioned whether the additional enforcement was beneficial or not. Taking into account the fact that the ambitious target had been exceeded by a considerable amount, Maugham commented that some may feel pressured to pay tax which may not, in fact, be owed. He said:

“Not all of the extra tax take is from clear-cut tax evasion – it is often from HMRC imposing its view of how the tax system works on SMEs and individual taxpayers, through the use of an army of tax inspectors and lawyers.”

Further, Maugham explained how those that couldn’t afford professional support when faced with an investigation by HMRC would be placed at a disadvantage. Due to a lack of professional support and possibly a lack of knowledge, many will just pay the amount rather than face costly litigation.

During 2012-13 it was also noted that a number of individuals and small businesses were still struggling to deal with the recession. HMRC is likewise suffering the resulting effects of the recession and is making cutbacks.

This includes reducing the numbers of experienced staff at HMRC, which could lead to errors being made when issuing tax calculations. As HMRC is under increased pressure to raise revenues, some of the more contentious claims may be pursued.

According to a HMRC spokesperson, the Government has invested almost £1bn in the organisation so that it can “catch the cheats”. The spokesperson added that the majority of taxpayers abide by the rules and HMRC would work harder to catch those who don’t.

 

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Karl Bilby

We work very closely with our expert accountants to bring you the latest factually correct tax and accounting news. We also enjoy writing about small business news that we hope you find useful!

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