According to the figures, the amount collected through tax enquiries and other compliance work increased by 37%, up from £12bn in the previous year.
Roy Maugham, tax partner at UHY Hacker Young said: “This is the biggest annual increase in the amount of money taken through compliance work since HMRC was established five years ago.
“Although this money helps to fill the hole in the Government’s deficit, there is a big downside. The extra investigations, the more aggressive stance HMRC takes, the changes in law needed to give HMRC new powers – everything needed to collect this extra money – all risks making the UK a less attractive jurisdiction for businesses.”
Specifically, Maugham said many companies have moved their domicile overseas to countries such as Ireland, Switzerland and Malta – not just because of the UK’s high taxes, but because of the “increasingly aggressive attitude of HMRC to tax collection”.
Maugham added that loss in tax revenues from businesses that decided not to locate their headquarters in the UK could also be costly.
“The Government and HMRC now seem to believe that they found the secret of alchemy. All they need to do is invest more money in tax investigations and compliance work and the extra tax income will keep flooding in,” he said.
“The reality is that much of the money that HMRC collects from compliance work is from businesses that feel intimidated into settling with HMRC or it is from litigation where HMRC is able to outspend a less well-resourced small or medium sized company.”
