Proceeds from tax investigations have jumped 50 per cent in two years

20 December 2010

Yield from HM Revenue & Customs’ investigations into serious tax evasion have risen sharply in the past two years, according to a National Audit Office report.

The investigations generated GBP8.5 billion of extra revenue in the financial year 2009-10 – an average of GBP329,000 per investigation.

After adjusting for inflation, this was 50 per cent higher than the 2007-08 figure, even though HMRC’s civil investigations directorates had in the meantime cut its costs by 10 per cent in real terms.

However the NAO report also found that  investigations are taking far longer than they should. The target average length of an investigation for suspected evasion is 18 months, but the average investigation in 2009-10 took 25 months. Nearly one in seven went on for more than three years.

The report also told HMRC to improve its system for choosing the cases it investigates. Under the current referral system it is referring about 4,000 cases a year to specialist investigation teams, but that number has fallen by 13 per cent since 2008.

HMRC also needs to rationalise the way it imposes penalties, said the NAO. In 2009-10, the average penalty charged was 21 per cent of the tax due. Some 28 per cent of those investigations involved a penalty of less than 10 per cent; in half of those cases no penalty was charged at all.




National Audit Office

NAO (Full text of report)

Accountancy Age



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