Days before the Spring Statement, a 15% cut to Civil Service running costs was headline news, but in her statement the Chancellor promised further investment in HMRC, particularly:
- Debt management
- Offshore tax non-compliance
- Counter-fraud
Debt management
By the end of December 2024 HMRC was owed over £44billion. Reeves confirmed her determination to get some of this money back by expanding and modernising HMRC debt management capacity. This includes an innovative “test and learn” pilot to collect more aged debts, which further down the line could result in automated debt recovery. To drive this testing HMRC will recruit an additional 500 compliance staff to the 5,000 already announced in the Autumn budget.
Offshore tax non-compliance
Reeves also announced additional investment to overhaul HMRCs approach to offshore tax non-compliance by the wealthy – recruiting up to 400 wealth management experts from the private sector, with the aim of bringing in over £500 million. The private sector experts will not be alone; the government will deploy Artificial Intelligence (AI) and advanced analytics to help identify, challenge and tackle wealthy offshore non-compliance.
Counter-fraud
An expansion in HMRCs counter-fraud capability is expected to lead to an increase in the number of charging decisions for the most harmful fraud by 20% by 2030. This will also lead to further investigations addressing organised crime attacks, focussing on illicit finance and money laundering schemes.
Joined-up working
HMRC will also join forces with Companies House and the Insolvency Services to deliver a joint plan for tackling contrived insolvencies used to evade tax and other creditors. This is anticipated to double the tax protected to £250 million by 2027.
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