- March 6, 2017
- Posted by: STERLING FINANCE
- Category: Claims, HMRC, Tax Investigation
In 2016, up to the end of August, we have seen a 6% increase in the number of claims notified compared with the same period in 2015. The types of claims we have seen are illustrated in the chart below.
The most common types of claims are as follows:
3. IT Aspect = 12%
In terms of HMRC focus, the types of enquiries we are seeing in the current year are consistent with 2015 and it would appear that HMRC is continuing to focus on routine VAT reviews and aspect enquiries into Self-Assessment Tax Returns.
Whilst CT / IT Full Enquiries and VAT / PAYE disputes are less common, they do tend to take longer to resolve and are more expensive in terms of accountancy fees.
In August 2016 alone we saw a 50% increase in claims notified compared with August 2015 and we will be monitoring this trend very closely in the coming months.
HMRC compliance news
The threat is real. HMRC has restated its ambition to collect more money than ever and here are 10 facts on the progress that it has made during 2015/2016.
- HMRC’s number one objective in 2016/17 is to ‘maximise revenues due and bear down on avoidance and evasion’.
- £26.6bn in compliance revenue was secured in 2015/16, with £27bn the target for 2016/17.
- £7.3bn of the compliance revenue was collected from the 2,100 largest businesses in the UK.
- Almost half of large businesses are under enquiry at any one time by the 2,400 staff in HMRC’s Large Business directorate.
- A further £415m was brought in from the UK’s 6,000 wealthiest individuals by HMRC’s High Net Worth Unit.
- During 2015/16, HMRC launched 48 new taskforces targeting SMEs in various geographical regions.
- The taskforces targeted double glazing firms, hot food takeaways, the fishing industry, restaurants and landlords to name a few.
- HMRC intends to make better use of the data it receives, including from companies that process card payment transactions. Sales of £400 billion a year are made through the use of credit cards and, no doubt, HMRC will use this information to check the turnover being declared by businesses and to test the proportion of sales likely to have been paid for in cash.
- A new Enterprise Data Hub has been built by HMRC to consolidate all the information it currently holds in eleven separate data warehouses. This means the data is easier to interrogate by HMRC analysts to identify individuals and businesses for enquiry.
- Although the public perception may be that HMRC is losing staff, the opposite is the truth. In 2015/16 the number of staff employed by HMRC rose by 2,291 to 58,621. Of those, nearly half are employed in the Enforcement and Compliance directorate, which also saw a rise in staff up to 26,798 from 26,222.
As you can see, HMRC is skilled and infinitely more organised in the capture and analysis of bulk third party information.
As a result, HMRC’s risk assessment process is increasingly effective at identifying suitable cases for enquiry and, therefore, your clients need to take extra care ensuring their business records are robust and their accounts are complete and accurate.