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HMRC is getting more money back from its business investigations than ever before

The return on investment per pound spent by HMRC on large business investigations has increased by 17% in the year ending 31 March, according to law firm Pinsent Masons.

Pinsent Masons said that the amount of extra tax returned for every £1 spent on large business investigative staff reached £77 last year, up from £66 in 2015-16. In comparison, the Counter Avoidance Directorate and Fraud Investigation Service (FIS) returned £46 and £13 respectively for every £1 spent last year.

The 17% increase records the highest rate of return of any specialist investigation team for the second consecutive year.

Nick Lowe, Tax Director at Bennett Verby, said

“HMRC is continuing its policy of stringent and frequent investigation into the affairs of larger businesses as it looks to increase the amount of extra tax it collects from these enquiries.

“This very high level of success will only increase their fervour, especially as the Treasury has committed to providing an additional £1.8bn to HMRC to support tax collection through investigations.

“At Bennett Verby, we believe everyone should pay exactly the right amount of tax. No more and no less.”

The report pointed out that, for another year, the Large Business Directorate has reaped the most rewards for HMRC in additional tax.

At the same time, the FIS’ return on investment has reduced by 56% over the past year – from £30 for every £1 spent in 2015-16 to £13 last year. The decreased yield might be an indication that the FIS has resolved its straightforward cases and is now dealing with more time consuming and complex investigations.

Pinsent Masons say that it is perhaps surprising that the Large Business and Counter Avoidance directorates saw increased returns yet again given that yields were already inflated by the successful issuance of Accelerated Payment Notices (APNs) to large business the year before. HMRC seems to have had another bumper year, this time likely driven by DPT.

The Large Business Directorate supports tax compliance across the 2,100 largest businesses in the UK. Investigations involve a range of tax affairs, including corporation tax, VAT, and transfer pricing.

If you have concerns about your company’s vulnerability, why not get in touch and take advantage of our free, no obligation initial consultation?

You can email us here or call us on 0161 476 9000.

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