From The Times
April 28, 2009
Revenue to pour quarter of its £4bn budget into battle against tax
evasion
Tom Bawden and Michael Herman
HM Revenue & Customs is to spend £1 billion on enforcement and
compliance this year to cut tax avoidance and evasion by £2.4 billion,
Britain's most senior tax collector said last night.
50 per cent for the highest earners, the Revenue said that it would
spend a quarter of its £4 billion budget on catching tax-dodgers. Lesley
Strathie, who took over as the HMRC's chief executive and permanent
secretary five months ago, said that the organisation would relentlessly
pursue those who bent or broke the rules.
The clampdown comes after a change of tack by the Revenue's prosecutors
last year. In its “litigation and settlement review” the Revenue
promised to take more people to court to recover tax instead of cutting
deals in out-of-court settlements. With companies and individuals
prepared to defend themselves in court, such a strategy has proved
expensive.
Hartley Foster, a tax partner in DLA, the law firm, said that it was no
surprise that the Revenue would divert more money to enforcement after
introducing a deliberate strategy of picking more costly court fights.
He said that since the Revenue was under pressure to increase its
overall tax take, it appeared to have decided that enforcement was a
worthwhile area on which to spend money.
Mr Foster said: “Like any other entity, the Revenue is dividing its
budget on the basis of putting money into areas where they believe they
will get the greatest return. Twenty-four per cent of the overall budget
suggests compliance and enforcement is a major focus area for the coming
year.”
The amount that HMRC is prepared to spend on its tax crackdown was
contained in its first department-wide business plan, which was
published yesterday.
Toby Ryland, a partner in Blick Rothenberg, the accounting firm,
described the sum that HMRC is spending on enforcement and compliance,
the biggest chunk of its expenditure, as “staggering”. He said:
“Taxpayers can expect far more frequent enforcement actions, inquiries
and challenges to their tax affairs and far greater scrutiny of their
affairs, even where they have structured their finances within the
letter of the law.”
James Bullock, a tax partner in McGrigors, the law firm, said:
“Compliance and enforcement is a large department that covers many
areas. But £1 billion is still a huge amount of money and it shows the
Revenue is serious when it says it plans to step up the fight against
tax avoidance and tax evasion.”
Ms Strathie said: “Our challenge is to meet increased demand on our
services while the resources available to us substantially reduce by
2011. In effect, we need to do much more with less as we respond to the
current economic climate and the needs of our customers.
“In the current difficult economic climate, it is more important than
ever that HMRC helps and supports customers fulfil these obligations
while relentlessly pursuing those who bend or break the rules.”
Alistair Darling said in the Budget last week that people earning more
than £150,000 a year would see their tax rise from 40 per cent to 50 per
cent, prompting threats by some that they would move to a lower-tax
country and fears that the accountants of others may become more
creative.
Yesterday's HMRC business plan marked the first time that the Revenue
has broken down its spending. It revealed that 21 per cent of its £4
billion annual budget is spent on IT and 18 per cent on personal tax.
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