A staggering £16bn was lost through tax fraud last year, despite HMRC recovering £5bn through its Fraud Investigation Service (FIS).
HMRC set up the FIS in July 2015, with 4,500 people employed to perform investigations into serious fraud. It has now been revealed – following a freedom of information request by Pinsent Masons – that the FIS collected £2.7bn from civil investigations in 2016, and £2.2bn from criminal investigations.
However, it is estimated that nearly half of HMRC’s £34bn tax gap is lost through tax fraud annually. The tax gap is the difference between the amount of tax that is collected, and the amount that should be collected in theory.
“The new Fraud Investigation Service has been successful in collecting additional revenue but tax fraud remains very damaging to the Treasury,” said Paul Noble, tax director at Pinsent Masons.
“HMRC’s internal restructuring and the creation of the FIS demonstrates the government’s determination to stamp out tax fraud, especially in the aftermath of the Panama Papers scandal.”
“It’s essential that if you are offered the CDF, or have a disclosure to make, that you seek specialist advice as HMRC has adopted an increasingly aggressive stance to those who don’t cooperate. With the right advice, someone with an issue to disclose can do so without the risk of criminal prosecution. Proactive disclosure of tax irregularities has its advantages.”