HMRC has launched 137,000 tax investigations in the six months to December 2021, up 9% from the 126,000 investigations in the same period in 2020.
This amounts to the Revenue opening a staggering 1,062 tax investigations per day.
Tax investigation and insurance firm PfP, which uncovered the figure, said HMRC is ramping up its compliance activity as it looks to make up for revenue lost during the pandemic.
HMRC allocating more into tackling non-compliance
The tax office had, until recently, taken a ‘light touch’ approach towards individuals and businesses falling behind on their tax affairs, with schemes including the ‘Time to Pay’ initiative.
But HMRC will now be allocating more resources to investigations as staff previously working on pandemic programmes – such as furlough – are freed up for other duties, the firm stressed.
“This jump in tax investigations comes as the Government seeks to fill the black hole left in the public finances by the pandemic”, said Kevin Igoe, Managing Director at PfP.
“The Revenue clearly sees increased compliance activity as one way to balance the books.”
Tax office handed extra £161m to enforce compliance
It has been said that HMRC will be looking to make up for the loss to the taxpayer from pandemic-related fraud and error, which the Public Accounts Committee recently estimated to amount to £15bn.
While just last week, in the Spring Statement, it was revealed that HMRC will be allocated an extra £161m over five years to ensure tax compliance – suggesting that the number of tax investigations will increase.
Harsher penalties on the horizon
The taxman is also likely to push for harsher penalties, as excuses for late payment are increasingly treated with less sympathy than when the pandemic was in full swing, said Igoe.
In a further sign of a more aggressive approach from HMRC, late payment interest increased this month from 2.75% to 3%.