Complex cases push down HMRC's tax investigation yield

HMRC’s yield from investigations has fallen 10%, from £73 for every £1 spent in 2014/15 to £66 in 2015/16, according to law firm Pinsent Masons

HMRCs yield was £73 for every £1 spent on investigations in 2014/15, however the latest records (2015/16) show it had fallen to £66 per £1.

Pinsent Masons partner Heather Self suggested HMRC was moving onto ‘tougher and more complex cases’, leading to less value.

Self said: ‘Falling returns from “easy to win” cases may lead HMRC to step up activity and take an increasingly hard-nosed stance going forward. That could mean more conflict with large and medium-sized businesses.’

The yield relates to HMRC’s Large Business Directorate, established in April 2014 to manage the tax compliance of the 2,100 biggest and most complex businesses. Teams aimed at individuals/small businesses and wealthy/mid-sized businesses were set up last year.

Self warns against HMRC being ‘too hard’ in its investigations, even if facing political pressure to make good investment against avoidance and evasion.

‘It needs to balance its drive towards clamping down on abuse and avoidance with the need to maintain an attractive environment for both businesses and high net worth investors,’ she said.

‘Achieving this balance will be especially important as we head towards Brexit and the need to make the UK an attractive venue for doing business becomes more important than ever.’

In 2016/17 HMRC said it would aim to increase prosecutions on wealthy individuals and corporates to 100 a year by the end of parliament (then 2020).

HMRC has been contacted for comment.

Report by Kevin Reed 

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