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Government officials have managed to reclaim more than £500 million in unpaid tax from small business and sole traders over the past five years.
The taskforces introduced by HM Revenue & Customs in 2011 have been hugely successful in identifying those firms and self-employed workers who commit fraud on their tax returns.
Sectors regarded as carrying particularly high levels of risk, such as retail, tobacco, and adult entertainment, have been specifically targeted, and a government spokesman says the taskforces have so far recovered over £540 million. Almost £248 million was reclaimed in 2015/16 alone.
Jennie Granger, director-general for enforcement and compliance at HMRC, said: “If you try to cheat on your tax, we are going to catch you. A small number of people still think they can cheat the tax system; these figures prove we can track them down and take back what they owe.”
HMRC’s Taskforce Map, showing locations and sectors targeted since 2011/12.
The recent sharp increase in the amounts reclaimed by HMRC reflects the fact that almost 50 new taskforces were created in the 2015/16 financial year, including one targeting property, partnerships, and hidden wealth and another focusing solely in income tax evasion.
The taskforces typically operate by targeting specific sectors or regions with visits and in-depth checks on record-keeping. HMRC says that these operations are just one part of its compliance strategy, which managed to bring in almost £27 billion in 2014/15, a 43% rise on the figure recorded back in 2011/12.
However, the parliamentary Public Accounts Committee (PAC) said in April Public Accounts Committee (PAC) said in April that HMRC was still not doing enough to tackle tax fraud, and was particularly critical of the lack of prosecutions in higher-value cases.
Presenting the committee’s reportTackling Tax Fraud, chair Meg Hiller MP said:
“The scale of tax fraud, both in cash terms and as a proportion of uncollected tax, demonstrates just how vital it is for HMRC to bring focus to its efforts in this area.
“The public purse is missing out on some £16 billion in tax a year because of evasion and other criminal activities. When people break the law, there must be consequences—and there must be seen to be consequences.”
In recent years, the PAC has been especially critical of the fact that HMRC is far more likely to prosecute small firms and sole traders, while major corporations – some of which are found to owe many millions of pounds’ worth in unpaid taxes – are often allowed to reach out-of-court settlements with the taxman.
In many cases, such settlements are made on a confidential basis, which means that taxpayers and politicians are unable to judge whether or not they are fair.
You might avoid a fine if a close relative died shortly before the self assessment deadline, you've been seriously ill, or if you had major IT problems.