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HMRC tax yield from civil fraud investigations up 13%

The amount of extra tax collected by HM Revenue and Customs (HMRC) following investigations by its specialist fraud team increased by £300 million last year, primarily driven by an increase in civil investigations.12 Sep 2018

HMRC's Fraud Investigation Service (FIS) collected £5.47 billion in extra tax in the year ending 31 March 2018, up from £5.17bn the previous year, according to figures obtained by Pinsent Masons, the law firm behind Out-Law.com. Yield from civil investigations increased by 13%, from £2.36bn to £2.66bn, while yield from criminal investigations stayed level at £2.81bn.

The increase comes as HMRC seeks to further expand its civil powers, according to tax investigations expert Steven Porter of Pinsent Masons. HMRC usually reserves criminal investigation for cases where it needs to send a strong deterrent message, or where the conduct involved is very serious.

"HMRC has thrown serious weight behind its elite team of tax investigators, which now seems to be paying off given the overall increase in revenue," he said.

"It is clear that HMRC is doing more than ever to try to root out tax evasion – including asking for a relaxation on some independent checks on its civil powers. Although we think it is pretty impressive that the amount it is collecting is still rising there are those in the Treasury who want more. Some see HMRC's compliance teams as a magic porridge pot that will keep producing, no matter what – but to do that, HMRC argues that it needs ever more sweeping powers, and without the oversight, the checks and balances that helped ensure HMRC acted in a fair and proportionate manner," he said.

In July, HMRC published for consultation plans that would allow it to submit information requests to financial institutions, accountants, lawyers, estate agents, social media platforms and other third parties that hold information about taxpayers without first seeking approval from the tax tribunal, which is required at present.

As an alternative, the consultation also proposes the introduction of a new 'financial institution' information request right, which would allow HMRC to obtain bank statements, transaction histories and other basic banking information "reasonably required to check a taxpayer's tax position" without tribunal approval. Should HMRC take this proposal forward, other requests for information would remain subject to tribunal approval.

The FIS is a centralised group of HMRC's best and most experienced investigation teams, set up specifically to tackle the highest value cases of suspected tax evasion and fraud. It was established in July 2015 following an internal restructuring at HMRC, prompted by criticism of the department's track record of successful prosecutions for criminal tax evasion in the UK and offshore.