New data shows HMRC opened 169,000 compliance checks in the last six months, up 46% from just 78,000 the six months before*.
A compliance check is an investigation into one’s tax affairs and is usually carried out when HMRC believes tax has been underpaid.
This rise in compliance checks suggests that HMRC is increasing its focus on tax investigations as it bounces back from the Covid slowdown.
Additional data from HMRC shows there has been a 20% rise in individuals being charged with tax evasion in the last six months – rising to 165 from 139 (from six months prior).**
The increase in charges suggests that HMRC is looking to pursue individuals that commit tax offences and bring them to court. Those who go to trial could find themselves facing a custodial sentence.
With the Government lifting social distancing measures, HMRC will be able to carry out more of its compliance work in person. This includes face-to-face interviews and premise searches, which may lead to more charges being bought forward.
The remainder of HMRC’s workforce which was allocated to administering the furlough scheme have returned to their compliance work as furlough has come to an end. This means HMRC will be able to operate at an increased capacity (compared to the past 18 months), which could result in more investigations.
Those who are subject to an investigation are likely to see their tax affairs undergo rigorous scrutiny by HMRC – as in person visits and premise searches become more and more common.
With compliance checks and charges on the rise, taxpayers need to ensure they are actively keeping on top of their tax affairs. Those who have concerns should take immediate action to avoid being investigated.
Tax investigations can be very stressful and costly for those involved. You can protect yourself against the cost of most tax investigations by subscribing to our Tax Investigation Service. Contact us for a quote on firstname.lastname@example.org or call 01242 776000.
*Final six months of 2020/21 financial year (March 31st year end) vs previous six months
** Final six months of 2020/21 financial year (March 31st year end) vs previous six months