HMRC’s new powers to tackle electronic sales suppression
The HMRC has issued advice about the new powers and penalties under the Finance Act 2022 to tackle electronic sales...READ MORE
Tax investigations into the UK’s 2,000 largest businesses generated almost £10 billion in extra revenue for HMRC last year, a law firm has reported.
Probes into 2,000 large businesses led to a 12 per cent boost in revenue collected by UK tax authority HM Revenue & Customs (HMRC), increasing to £9.8 billion in 2018-19 from £8.7 billion in 2017-18, law firm Pinsent Masons has said.
According to Pinsent Masons' analysis of HMRC data, there was a 67 per cent increase in the revenue generated through VAT investigations, contributing £6 billion of HMRC’s total income from investigations into large businesses.
A further £2.6 billion was generated by investigations into underpaid corporation tax.
“Bigger UK and foreign businesses are going to find themselves under continued scrutiny from HMRC over the next year,” said tax expert Stuart Walsh of Pinsent Masons.
“The new government’s spending pledges mean HMRC and the Treasury will be under pressure to raise more money. The view is that big businesses are not being put off investing in the UK because of the tax environment, so that gives HMRC scope to continue to push very hard wherever it sees the possibility of underpaid tax.”
He explained that HMRC was targeting financial services businesses, as a majority are not covered by the normal exemption from VAT for financial services, with areas such as M&A advice, portfolio management and some investment advice and research all taxable.
As of April, VAT exemption rules were changed such that insurers were no longer permitted to treat pension fund management services as exempt.
Pinsent Masons reported that HMRC data suggests that around 9 per cent (£12.5 billion) of all VAT due is unpaid, up from 8.5 per cent and 7.4 per cent the two previous years.
“VAT is likely to remain a flashpoint for HMRC over the next few years, given that there was a record level of VAT that HMRC believes it was underpaid last year,” Walsh said.