THE government is after tax evaders.

Those companies and individuals who practise non-compliance are firmly in the government’s crosshairs as the Treasury has put in place new funding to chase down such businesses.

The Chief Secretary to the Treasury, Danny Alexander, said there was £900m available. This was to be used to raise additional revenues from those who undermined the tax system. The Chief Secretary said that the measure should bring in around £7billion per annum by 2014-15 in additional tax revenues.

The government said that allocating this money to HMRC sent a clear signal that the Spending Review was to be focused on both fairness and deficit reduction.

So where will the £900 million be spent? HMRC has been advised to reduce compliance risks by targeting the following areas.

Avoidance and evasion

Making it harder for individuals and companies to avoid tax and working to prevent tax avoidance before it happens. Funding will be available for:

• a more robust criminal deterrent against tax evasion – HMRC will increase the number of criminal prosecutions fivefold

• a crackdown on offshore evasion with the creation of a new dedicated team of investigators to catch those hiding money offshore

• deployment of dedicated tax experts to extend HMRC’s coverage of large businesses, focused on providing resources to tackle high-risk areas.

Tax debt

Reducing the amount of tax that is lost to the Exchequer each year through tax debt. Funding will be available for:

• placing up to £1bn per year of tax debt out to private sector debt collection agencies improving the scope of in-house debt collection.

Organised crime

Organised crime and criminal attack is estimated to contribute around £5bn a year to the UK tax gap. Over the spending review period funding will be available for:

• more registration checks to stop people claiming tax repayments when they are not due the creation of bespoke cyber crime teams and specialists to help prevent criminal attack on HMRC’s electronic systems

• more investment in freight and detection technology to prevent alcohol and tobacco smuggling.

HMRC will start implementing the revenue reduction policies immediately.

According to the Treasury, tax evasion costs the Exchequer £7billion each year in uncollected tax revenues; avoidance costs around the same figure. Attacks on the tax system by organised criminals are estimated to cost around £5billion, the Treasury said.

Further information

You might be interested in the following comment in the Editor’s Blog Standing up for the tax man.

£900m put aside to recoup lost taxes