HMRC believes the best way to tackle non-compliance is to prevent it happening in the first place, while cracking down on the minority who
do bend or break the rules. HMRC’s approach involves:
- promoting compliance by designing it into their systems and processes, helping taxpayers get things right from the very start
- preventing non-compliance by using the data it holds have to spot mistakes, personalise services and support, block fraudulent claims, and automate calculations
- responding by identifying and targeting the areas where there may be tax at risk – and using tough measures to tackle those who deliberately try to cheat the system
- Since 2010, the government has invested more than £2 billion in HMRC to tackle evasion, avoidance and non-compliance and announced more than 100 measures to tackle non-compliance in the tax system and aggressive tax planning.
Between 2010 and 2015, the government made more than 40 changes in tax law, closing down loopholes and introducing major reforms to the UK tax system. Since 2015 the government has announced more than 45 further legislative changes to tackle avoidance, evasion and aggressive tax planning. Key changes include:
- ensuring that employers cannot continue to use disguised remuneration schemes to avoid paying Income Tax and National Insurance contributions when paying their staff
- levelling the playing field between property developers based in the UK and those overseas by ensuring that profits from the development of UK land will always be fully subject to UK tax
- coming down hard on enablers of offshore and onshore tax evasion by introducing new criminal offences which make it easier to prosecute corporate organisations and partnerships that fail to prevent their representatives from facilitating evasion
- tackling the hidden economy by extending HMRC’s data-gathering powers to online intermediaries, electronic payment providers, and money service businesses
- introducing a new penalty for those who enable the use of tax avoidance schemes that are later defeated by HMRC
In addition, HMRC has also been working hard to reduce the VAT tax gap by:
- bearing down on organised VAT fraud – the (MTIC) element of the VAT gap held for several years at £500 million to £1 billon and has now reduced to less than £500 million)
- introducing anti-fraud measures –’joint and several liability’ for online marketplaces holding them liable for any unpaid VAT of overseas businesses who are non-compliant with UK VAT rules, and a ‘domestic reverse charge’ for wholesale telecoms, meaning that VAT is based on where customers are based rather than where the supplier is based
- becoming digital by default – introducing online VAT filing, online VAT registration and Notification of Vehicle Arrivals for vehicles imported into the United Kingdom
These measures are examples of how HMRC is making it harder for people to avoid or evade their taxes.
The team at Bedrock works with accountants and their clients to ensure that they fully understand the complexity of UK tax regulations and how they apply to their business. We also work with clients who need to enter into a settlement arrangement because they are now caught by changes to regulations that mean HMRC is pursuing them for tax owed. Read more about how we can support accountants and clients in this situation.
