HMRC investigative activity is on the rise…

Tax investigations specialists have long anticipated increased tax investigation activity following the suspension of investigation work by HMRC during the height of the COVID-19 crisis. We are now seeing evidence of this increased activity being reported and the rise in investigative activity is expected to continue.  

HMRC’s reported tax investigation revenue has increased by £1.2bn when comparing 2021 with 2020, resulting in total revenue generated from investigative activity of £30.8bn. Whilst recent years have seen HMRC investing in additional manpower to support the administrative burden caused by COVID-19 support schemes, HMRC are also investing heavily in enquiry work, with a view to recovering unpaid taxes and preventing tax revenue losses.  

Individuals and businesses should note that tax investigations can be raised by HMRC regardless of whether any wrongdoing is present, and taxpayers are required to comply with these investigations. This can give rise to significant costs, both monetarily and in time spent corresponding with HMRC.  

It is therefore a good time for all businesses and individuals to review their tax affairs, and where any errors are found to have been made, come forward via the voluntary disclosure procedures that exist.  

We are not surprised at all to see tax investigations across all sectors start to increase as HMRC deploy or re-deploy their resources in this area. We expect this continue for the foreseeable future, but we have seen examples of HMRC information being incomplete or incorrect, so care should be taken when dealing with tax investigations conducted by HMRC. Professional advice is recommended. 

If you require assistance with a tax investigation, or have concerns that your personal or business tax affairs may require correcting via a voluntary disclosure to HMRC, or would simply like a review to provide you with peace of mind that your tax affairs are in order, please do not hesitate to contact Michaela McCombie or any member of our dedicated Tax Investigations Team.

Find out more about our tax investigation service here, and find out more about Tax Fee Protection Insurance here.