HM Revenue and Customs has stepped up its efforts to crack down on tax evasion and aggressive tax avoidance, resulting in a record-breaking £39 billion collected from tax investigations in the year ended 31 December 2023. This figure represents a staggering 22% increase from the £32 billion collected in 2022, highlighting the tax authority’s growing success in targeting areas where significant amounts of unpaid tax are suspected. Our expert tax team has analyzed the data and identified several key areas where HMRC has focused its investigations, yielding substantial results.

Ultra-High Net Worth Individuals

HMRC has been closely monitoring ultra-high-net-worth individuals suspected of underpaying taxes. A prime example is the Bernie Ecclestone investigation, which alone brought in a whopping £653 million in tax and penalties. This case demonstrates the tax authority’s determination to ensure that even the wealthiest individuals pay their fair share of tax.

Cryptocurrency Traders

As the popularity of cryptocurrencies has soared in recent years, so too has HMRC’s interest in ensuring that traders properly declare their gains for tax purposes. The tax authority has launched a new campaign of enquiries targeting cryptocurrency traders, aiming to identify those who have failed to report their profits accurately.

Residential Landlords

HMRC has also targeted residential landlords who may need to declare their rental income properly. The Let Property Campaign is a key initiative in this area, encouraging landlords to disclose any previously undeclared income to avoid harsher penalties. This campaign has proven successful in pushing landlords to confess to tax evasion and pay what they owe.

Multinational Businesses

Large multinational businesses have also come under increased scrutiny from HMRC, particularly in relation to their use of ‘transfer pricing.’ This practice involves cross-border payments between companies within the same group, which can be used to reduce corporation tax bills in the UK. HMRC is cracking down on aggressive transfer pricing strategies to ensure that multinationals pay their fair share of tax in the UK.

The record-breaking £39 billion collected from tax investigations in 2023 is a testament to HMRC’s growing effectiveness in tackling tax evasion and avoidance. The tax authority’s use of advanced technology, including artificial intelligence (AI), has played an important role in identifying non-compliance and bringing tax evaders to justice.

As one of our tax experts explains, “HMRC is becoming stricter and cracking down on unpaid tax in all areas, and these figures indicate that its efforts are yielding results. Any business or individual with unpaid tax should be aware that their likelihood of evading detection is lower than ever. HMRC is using more technology, including AI, to identify offenders, and the government is willing to finance more investigations.”

For those who have underpaid taxes, seeking professional advice and coming clean to HMRC is crucial. Our expert advises, “Taking professional advice and then disclosing to HMRC will almost always lead to a better outcome than hoping HMRC doesn’t discover your non-compliance.”

The record-breaking £39 billion collected from tax investigations in 2023 serves as a stark warning to anyone tempted to evade or avoid paying their fair share of tax. With HMRC’s increasing sophistication and the government’s willingness to fund more investigations, the risks of non-compliance have never been higher. To minimize the risk of facing serious penalties from an HMRC investigation, it’s important for individuals and businesses to actively seek guidance from tax professionals and promptly disclose any outstanding tax obligations.