Tax Investigations bring in an extra 28% in 2024

Tax Investigations bring in an extra 28% in 2024

HMRC have received extra funding by raking in £45.7bn from tax investigations in 2024, a £10bn rise from the previous year, while over £10bn more in VAT may yet be recovered from large businesses, as we are informed that another 5,000 more compliance officers are being recruited by HMRC across the next five years.

The extra funding is predicted to bring in an extra £2.7bn per year, roughly 7% of the tax gap, which is part of the government’s aim to close the tax gap by putting a squeeze on tax evasion and tax avoidance.

But with an estimated £10.1bn in VAT not being paid as above, new compliance officers will have to hit the ground running to make up the speed at which the tax gap is growing. In 2023 HMRC estimated underpaid VAT to be at £8.1bn, a rise of 20% in just one year.

The new compliance staff are expected to take 18 months to be fully trained, and they will be joining the estimated 26,000 compliance officers spread across 11 teams.

VAT is predicted to make up 22.5% of the tax owed by large business, although much of this tax is in dispute.

There are just 2,000 companies covered by the HMRC’s Large Business Directorate, with 74% of the £10.1bn predicted to have been underpaid by these organisations, in what HMRC described as ‘legal interpretation and boundary pushing’. It expects that 72% of this unpaid VAT is down to this. However, £5.8bn was recovered in VAT from large businesses.