HMRC Clampdown on tax evasion and avoidance
Raunaq Mohammad
26th March 2025
Written by Raunaq Mohammad
A fresh clampdown on tax evasion and avoidance is expected to net the Treasury an additional £1bn over the next four years as per measures set out in the recent Spring statement.
In the only revenue-raising measure of the statement, chancellor Rachel Reeves unveiled a package of initiatives which build on measures to tackle tax non-compliance set out in last year’s autumn budget.
These measures include an increase in the rates at which late payment penalties are charged from 2% to 3% for taxpayers in the government’s Making Tax Digital (MTD) program.
The changes will affect VAT taxpayers from next month and will also impact self-employed people and landlords with at least £50,000 annual earnings when they join the program from April 2026.
The new rates will be 3% of the tax outstanding where it is overdue by 15 days, plus another 3% when it is overdue by 30 days, plus 10% per annum where tax is overdue by 31 days or more.
The Institute of Chartered Accountants in England and Wales described the increase as “very significant” and warned that timely payments would be “more critical than ever for taxpayers and businesses”
Reeves said new measures to boost tax collection would raise a further £1bn in tax revenue by 2029-30 bringing the total additional tax raised from improved compliance to £7.5bn in 2029-30. Overall, the changes she announced on Wednesday will result in additional tax by that period of £2.2bn.
Supporting documents for the Spring Statement released on Wednesday, revealed more details about how the government plans to increase tax collection through clamping down on evasion and avoidance.
There is a clear motive here to be seen as a result of the clampdown on tax evasion and the benefits are already beginning to show.
In recent years, there have been several tax advice scandals in which rogue advisers have pushed non-compliant advice and schemes. These range from tax avoidance outfits preying on NHS workers to companies pushing fraudulent research and development claims and the use of discredited loan schemes.
The consultation asks for input on various enforcement measures to tackle rogue advisers including stronger penalties, publishing details of tax advisers subject to HMRC sanctions and HMRC sharing information about non-compliant advisers with their professional bodies.
The government also released a planned consultation on introducing a new system of advance clearances for R&D claims to help prevent error and fraud and improve the claims experience.
The only thing left is that now all the talking has been done, whether or not this HMRC clampdown will come to fruition or not in the long run.
