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HMRC collects £255 million, highest in three years, from personal tax investigations over the last year

HMRC has raked in £255 million over the last year through tax investigations into the self-assessment returns of personal tax payers, says national accountancy group, UHY Hacker Young.

This is the highest amount collected through personal tax self-assessment investigations in three years and is a 7% jump from the £238 million collected in 2008/09

Aileen Scott, tax partner at Campbell Dallas, the only Scottish member of UHY Hacker Young, said: “Although much of the attention paid to HMRC’s compliance work has been related to its pursuit of high-net-worth individuals with offshore bank accounts, this year has seen HMRC launch a number of initiatives aimed at ordinary taxpayers.”

The latest campaign launched on 10 October focuses on those who provide private tuition, instruction and coaching. In early 2012 HMRC plan to target those who are using e-marketplaces to buy and sell goods. However, this will not affect those who only sell a few items on sites such as eBay or ticket sites. It will target those who have a steady stream of transactions and income from this source. In addition, HMRC will start to target electricians in February 2012, following on from an earlier targeting of plumbers.

“These figures show that HMRC is determined to do whatever it can to clamp down on tax avoidance and pursue every opportunity it has to collect more tax. Although the most headline-grabbing campaigns have centred on high-net-worths, we are seeing an increasing number of investigations into middle earners.”

As well as investigations into individuals through their self-assessment tax returns, HMRC is targeting particular trades through its separate specialist investigation programmes.

“Those who are going to be at particular risk of investigations over the next year are doctors, dentists, plumbers, tutors, residential property landlords and anyone in sectors that HMRC see as a bit too ‘entrepreneurial.’ These people are going to be investigated both through their personal tax returns and through any tax return they submit for their business interests.”

“HMRC has always been suspicious of freelancers and people who set up small businesses. If you are self-employed, you can consider yourself at far higher risk of investigation by HMRC both for personal tax affairs and your business affairs.”

HMRC has agreed aggressive targets with the Government for compliance work as part of the deficit reduction plans, which means that they will need to continuously ratchet up the income they gain through personal tax inquiries.