A fall in tax investigations means HMRC lost out on £9bn, says watchdog

While the Tories have been busy telling us that they can’t afford to invest more in public services, it’s emerged that a fall in tax investigations carried out by HMRC has cost the government £9 billion.

The FT reports: “HMRC investigated around 30 per cent fewer compliance cases in 2020-21 compared with the previous year. Criminal prosecutions fell from 700 to 163 over the same time period, according to a report by the National Audit Office published on Friday.”

The decline in HMRC’s work on tax compliance came about as the body shifted its resources and focus on Covid-19 support schemes.

Gareth Davies, head of the NAO, said: “HMRC had to move swiftly to reallocate resources to Covid-19 schemes, as the circumstances of the pandemic demanded. However, this directly affected its ability to investigate cases of people and businesses not paying the right tax.

“There is now a risk that more people ultimately fail to pay the right tax or escape investigation or prosecution. It is concerning that HMRC’s planning indicates that non-compliance may grow following the pandemic.”

LFF columnist Prem Sikka said: “It’s just bad planning from the government, they should’ve made additional investment in HMRC because for every £1 spent on HMRC it offers a return of between £40 and £50.”

He added: “There’s plenty of money, the government has already shown that it can provide money like its given tax cuts to banks, wheeled out money to save pension funds, it’s handed all kinds of goodies to people so the money is there, it’s just really bad planning.

“This £9bn could’ve more than settled the NHS dispute”.

Basit Mahmood is editor of Left Foot Forward

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