HMRC Tax Recovery Plan Under Fire From MPs

10A new plan allowing HM Revenue and Customs to seize funds from personal bank accounts to recover unpaid taxes has come under fire from MPs. The cross-party Treasury Committee recently announced that it has “considerable concern” about the plan, which was recently proposed by Chancellor George Osborne.

The Treasury Committee, a group of influential MPs, believes that the new powers could reintroduce the discredited and controversial Crown Preference rule – an old regulation that gave HMRC the ability to access personal accounts after companies went bust in order to recover unpaid tax bills.

Without some form of independent oversight, the new power granted to HMRC may lead to fraud and error, according to the Treasury Committee. In a statement, it said that a “lengthy and full consultation” would be required so that the public could be more aware of the powers the plan would give to HMRC.

Chancellor George Osborne has defended the plan, claiming that similar powers are already afforded to the Department for Work and Pensions. According to the MPs, the parallel between HMCR and the DWP’s ability to recover child maintenance is “not exact” – the Department for Work and Pensions, unlike HMRC, is “acting as an intermediary between two individuals” when it recovers funds from a personal account.

The committee claims that fraud could be an issue, and that incorrectly collecting money from accounts could result in issues for taxpayers. In order for any type of legislation allowing HMRC to recover funds from personal accounts to be accepted, the government “must consider safeguards” to protect against errors.

The government has responded to some criticisms of the plan, noting that the long-term economic plan involves reducing the deficit by collecting debts. It highlighted the “minority that chooses not to pay [taxes], despite being able” as a leading issue in reducing the deficit.

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HMRC’s ‘Most Wanted’ Tax Criminals List Fails to Generate Results

august-13-01In an effort to fight back against tax fraud, HMRC has spent the last twelve months in pursuit of the county’s twenty most serious tax fraudsters. The HMRC ‘most wanted’ list includes 20 tax cheats beloved to have cost taxpayers £765 million, of which just two have been caught, and only one jailed.

Blasted as a ‘massive failure’ by Labour, the HMRC tax evaders list includes some of the country’s most egregious tax offenders. Many of those featured on the list were involved in dodging VAT payments, often as part of illegal import/export business arrangements that profited from selling tax-free goods within the UK.

VAT fraudsters featured on the list include Hussain Asad Chohan, who has fled the country to live in Dubai. Chohan is wanted for his involvement in a VAT smuggling case that cost taxpayers over £200 million. After being convicted in absentia, he’s since fled to Dubai to avoid the police.

Others on the list include Nasser Ahmed, whose involvement in a £165 million VAT fraud resulted in a six-year prison sentence. Mr Ahmed is believed to be on the run in either Dubai or Pakistan. Of the 20 people featured on the list, only one – a well-known tax fraudster named John Nugent – has been caught, tried, and arrested.

Despite criticisms of the lists relatively poor record at catching tax evaders, HMRC recently added an additional ten criminals to their ‘most wanted’ file. Photographs have been added to the list to the assist the public in identifying the criminals, most of which the government believes are residing outside the UK.

As well as its recent updates to the list, HMRC has developed an online map that documents the purported identities of the wanted criminals. Chancellor George Osborne commented on the list, adding that ‘tax fraud and evasion is illegal and won’t be tolerated.’

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HMRC Tax Evasion Hotlines Proves Popular But Ineffective

june-17-01Over 300 calls were made to HM Revenue and Custom’s tax evasion hotline in the last year, according to a freedom of information request made by book publisher Bloomsbury Professional. The hotline fielded over 72,000 calls during the twelve months until May 2012, many of which were placed multiple times.

The hotline is an anonymous service designed to increase reporting of suspected tax evasion by the general public. With wage growth somewhat stagnant and economic opportunities limited, experts believe that the increase in tax evasion reports is due to an increased feeling of frustration and concern about potential tax evaders.

Despite the service’s incredible popularity, many in the tax auditing industry believe that it’s failing to meet its obligations in prosecuting tax evaders. The National Audit Office claims that the phone line is an inefficient, overly expensive method of finding tax cheats, and that traditional investigations are far more cost-effective.

Their findings seem to be backed up by the phone line’s own figures. In 2006, the tax evasion hotline brought in approximately £2.6 million in revenue for HMRC – a little more than twice its operating expenses. HRMC had projected claims of £26 million, a figure that far exceeds the tax evasion hotline’s actual income.

HMRC takes numerous steps in fighting tax evasion, including offering cash rewards to members of the public that report high net worth offenders. People that give tips on suspected tax evaders have reportedly earned tens of thousands of pounds from the government department, which is paid after tax payments have been recovered.

Despite failing to reveal large-scale cases of tax evasion, the hotline remains popular amongst tax advocates and the general public. Given the extent of many tax scandals in recent years, we could see an increase to the astounding 72,000 calls made to the hotline over the past year.

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HMRC deals with corporations under scrutiny

In the midst of government cuts in funding of social programmes due to ‘austerity measures’ there now seem to be deals on the table with major corporations which will cut taxes by billions of pounds. According to the NAO (National Audit Office), these corporate tax cuts are costing the UK severely during this time of financial crisis.

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HMRC’s computer system finding discrepancies from years back

According to the latest word being released by HMRC, as many as six million tax payers in the UK could be owed a rebate to the tune of £300. This is good news indeed for those looking forward to a rebate but for up to one million tax payers may receive notification that they still owe £600 which was underpaid.

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Treasury admits to losing uncollected taxes amounting to £35 billion

Much has been made of the tax gap of late and never was this made clearer than in the fact that Britain lost almost 8% of its annual revenue because of uncollected taxes, largely due to the ever present tax gap.

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HNWU Cracking Down on Wealthy Tax Dodgers

Billed as the elite division of HMRC, the High Net Worth Unit, or HNWU as it is referred to, has taken steps to track down wealthy tax dodgers. As a result, they have now collected six times what they had collected two years ago and in the coming years that number is forecast to increase again.

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