HMRC will receive additional funding of £140m to extend their on-line services and improve debt collection (amongst other measures) to ensure that taxpayers pay their taxes on time.
HMRC estimate that these measures will deliver over £2.3 billion in savings by:
- Stopping the overpayment of tax credits;
- Maintaining regular contact with pensioners living abroad to restrict overpayments when a death is not reported;
- Work in partnership with private debt collection services to increase their capacity to recover benefit and tax credit debts;
- Police the benefits and tax system to identify claimants with undeclared income; and
- Implement a Single Fraud Investigation System to target fraud across the welfare system.
This funding will provide HMRC with greater resources to collect unpaid tax and decrease the tax gap. These initiatives are expected to release other resources so that HMRC can focus on targeting tax fraud and evasion, as well as toughening and speeding up sanctions for fraud and error.
The initiatives detailed above will result in HMRC working more closely with private debt collection agencies who will take over more of the traditional debt recovery work. This raises concern that the agencies will be paid on a results basis, which may result in more direct collection methods being applied.
For more information on these changes or to discuss issues surrounding tax evasion or avoidance contact the TaxDesk on 0845 4900 509 and ask for John Hood.