According to a recent report, the number of tax cases being pursued by HMRC has risen by 43% over the past two years.
This rise equates to 7,377 first-tier tribunal cases in 2017/18, up from 6,559 in 2016/17 and 5,161 in 2015/16.
The report links this to an increase in the amount of personal data available to HMRC and the Revenue’s ‘Connect’ supercomputer, which is reportedly capable of analysing enormous amounts of data, such as the Land Registry, bank accounts and even eBay or social media accounts. I am unsure whether this is the real reason for this increase.
Personally, I think the rise is a direct consequence of increased pressure on HMRC to reduce the perceived ‘tax gap’. In some cases we are seeing, it is evident that HMRC are going to unprecedented lengths to pressure taxpayers into paying the maximum amount (note – not necessarily the correct amount) of tax – and in an increasing amount of cases, HMRC not being correct. This is particularly the case where taxpayers are known by HMRC to not be represented by a tax adviser, or not be adequately represented.
This sharp increase in tax cases again highlights the need for taxpayers to be well advised (by an experienced Chartered Tax Adviser) and be adequately represented should the taxman come calling. Additionally, it highlights the need for taxpayers to have adequate fee protection cover (something which we at RRL offer our clients) to cover the costs of their adviser dealing with HMRC in the event HMRC raise an enquiry.
A large area where we are seeing increasing HMRC enquiries is regarding inheritance tax, particularly on death. This presumably is due to the high yield of tax that HMRC can achieve (40p in the £1) by achieving success (by correct means or otherwise) in relation to such an enquiry. This again, is a reason for executors or administrators of estates to seek assistance from advisers suitably qualified to advise and represent them in relation to their position with HMRC. We feel that this is a significant reason why probate should be carried out by experienced tax advisers such as ourselves.
This publication has been prepared by RRL LLP. It is to be treated as a general guide only and is not intended to be a comprehensive statement of the law or represent specific tax advice. No liability is accepted for the opinions it contains, or for any errors or omissions. All rights reserved.