HMRC will recruit up to 5,000 extra staff to prepare for Brexit

HM Revenue & Customs will recruit up to 5,000 additional staff in 2018, the UK government said less than a week after HMRC Chief Executive and Permanent Secretary Jon Thompson told a parliamentary committee that the department was planning to review its priorities in the light of uncertainty created by Brexit …

“Alongside the negotiations in Brussels, it is crucial that we are putting our own domestic preparations in place so that we are ready at the point that we leave the EU,” a spokesman for Prime Minister Theresa May said after [an October 31 cabinet meeting]. “Cabinet heard many of these will be needed even in our preferred scenario of a bold and ambitious deal — for example, implementing either of our proposed customs arrangements will require investment in new systems and customs officers by HMRC.” Read more:

My news story for Tax Analysts, November 1 ($)

UK tax gap update highlights evasion, legal interpretation losses

A shift in the public debate is needed to ensure that everybody sees tax evasion as unacceptable, a leading UK tax expert said after official figures suggested that avoidance accounted for £1.7bn of a £34bn tax gap.

HM Revenue & Customs estimated that evasion, criminal attacks, and the hidden economy together accounted for £13.8bn, and error and non-payment for £6.4bn. Losses arising from differences in interpretation of the law accounted for £6bn, and failure to take reasonable care accounted for £6.1bn …

My news story for Tax Analysts, October 30 ($)

HMRC: Measuring tax gaps

HMRC can’t guarantee Brexit-ready customs service, Thompson says

HM Revenue & Customs will review its priorities early next year and may need up to 5,000 additional staff to secure successful delivery of a new customs service if the UK leaves the European Union without a customs agreement, according to HMRC Chief Executive and Permanent Secretary Jon Thompson.

Announcing on October 12 an inquiry into Brexit and the future of customs, the House of Commons Public Accounts Committee noted that HMRC was due to complete a five-year program for a new customs declaration service (CDS) by early 2017. Delays have meant that the CDS will not be fully operational until January 2019. Significant work is still required to meet the revised target, a National Audit Office report found in July …

My news story for Tax Analysts, October 30 ($)

Public accounts committee, oral evidence: Brexit and the Future of Customs

Perception that ‘odds are stacked’ against HMRC drives evasion, report says

A perception that the odds are stacked against HM Revenue & Customs and in favour of business impedes the effectiveness of the tax authority’s anti-evasion efforts, according to research that identifies four “distinct profiles of evader” among small and midsize businesses in the UK.

For any intervention strategy to work there is a basic requirement for those evading to “believe that there is a real risk that the evasion will be detected and proven,” said Quadrangle Research Group, a London-based consultancy that conducted the research in April 2016. “The main barrier to effectiveness” is that this is not currently the case, Quadrangle said in a report published on HMRC’s website on September 29.

A new offence listed in the Criminal Finances Act, failure to prevent the facilitation of tax evasion, came into force on September 30. HMRC published guidance on September 29, inviting companies and partnerships to “report on their own behaviour”. Read more:

My news story for Tax Analysts, September 30 (paywall)

HMRC research report: September 2017: Understanding evasion by Small and Mid-Sized Businesses

HMRC guidance September 29: ‘Tell HMRC about a company helping people to evade tax’

HMRC press release September 30: ‘Stop facilitating tax evasion or face criminal prosecution, HMRC tells corporations’

UK tax advisers welcome new HMRC service for expanding businesses

Expanding UK businesses are to receive tailored tax assistance from growth support specialists at HM Revenue & Customs who will offer help with tax queries and support in accessing reliefs and incentives.

“Mid-sized businesses make a vital contribution to the U.K. economy and I want to see them grow, succeed, and prosper,” Mel Stride, financial secretary to the Treasury, said in a September 20 statement.

About 170,000 UK businesses with turnover of more than £10 million or more than 20 employees are eligible and can apply online, HMRC said. Industries that could benefit include manufacturing, information and communications, and professional services, including legal and accountancy services. Read more:

My news story for Tax Analysts, September 21 (paywall)

HMRC flags potential costs of Brexit contingency planning

Uncertainty over the outcome of negotiations on the UK’s post-Brexit customs arrangements may force HM Revenue & Customs and traders to incur expenditure that could turn out to be unnecessary, officials told the House of Commons Treasury Committee September 14.

Committee Chair Nicky Morgan asked Jim Harra, HMRC’s director general for customer strategy and tax design, when he would need to know the outcome of negotiations with the EU-27 countries, which have not yet begun, to be able to start “putting things in place.”

“We’ve been advising the Department for Exiting the European Union and advising ministers on what the choices are . . . and the future partnership paper has been produced,” Harra said. The UK government’s proposals for a future customs relationship with the EU, published August 15, outline two broad approaches … Read more:

My news story for Tax Analysts, September 15 (paywall)

HMRC large business unit reveals increase in ‘tax under consideration’

HM Revenue & Customs has revealed that its estimate of the amount of tax large businesses might have underpaid rose to £24.8 billion for the year ending March 31, an increase of almost 14 percent from the previous year, while the department stressed that the figure did not represent tax actually owed or unpaid.

HMRC released its estimate of “tax under consideration” to the law firm Pinsent Masons in response to a freedom of information request … “A £3 billion rise in the tax HMRC is querying shows that HMRC is broadening its horizons and putting a far wider range of transactions under scrutiny,” said Heather Self, a partner at the firm.

“Tax under consideration is not tax owed or unpaid, it’s an estimate of what might be at stake if we didn’t investigate,” an HMRC spokesperson said in an emailed statement. Read more:

My news story for Tax Analysts, August 31 (paywall)